Reducing Medicare Costs through Innovation Act

To establish Centers for Medicare & Medicaid Services SBIR or STTR program grants which shall be known as Medicare commercialization grants. 1. Short title This Act may be cited as the Reducing Medicare Costs through Innovation Act 2. Medicare commercialization grants (a) Definitions In this section: (1) The term— (A) Administrator (B) Secretary (2) The terms commercialization Phase I Phase II Phase III SBIR STTR 15 U.S.C. 638(e) (3) The term eligible medical product (A) for which a grant recipient received a Medicare commercialization grant; (B) which will maintain or improve quality of care while reducing costs (as determined by the Secretary); and (C) (i) that is a drug, as defined under section 201(g)(1) of Federal Food, Drug, and Cosmetic Act ( 21 U.S.C. 321(g)(1) (ii) that is a biological product, as defined in section 351 of the Public Health Service Act ( 42 U.S.C. 262 (iii) that is a combination product, as described in section 503(g) of the Federal Food, Drug, and Cosmetic Act ( 21 U.S.C. 353(g) (iv) that is a device, as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act ( 21 U.S.C. 321(h) (4) The term eligible small business concern (A) has a focus on the diseases or conditions that are the top 10 cost drivers in the Medicare program under title XVIII of the Social Security Act ( 42 U.S.C. 1395 et seq. (B) is otherwise eligible for a Centers for Medicare & Medicaid Services SBIR or STTR program grant; (C) has completed Phase I activities; and (D) has funding for Phase II activities. (5) The term small business concern 15 U.S.C. 632 (b) Medicare commercialization grants (1) Establishment of program The Secretary shall establish within the Centers for Medicare & Medicaid Services SBIR or STTR program a grant program referred to as the Medicare commercialization grant program (2) Approval process for grant recipient's novel drugs, devices, or diagnostics A grantee may choose to submit an application for approval of novel drugs, devices, or diagnostics through a traditional approval process or through the pilot program for parallel review of medical products described in subsection (c). (3) Applications (A) Solicitation of applications The Secretary shall issue an annual solicitation of applications for the grant program under paragraph (1), with a focus on the diseases or conditions that are the top 10 cost drivers in the Medicare program under title XVIII of the Social Security Act ( 42 U.S.C. 1395 et seq. (B) Cost drivers in Medicare The Secretary shall assess, in consultation with stakeholders, and take into consideration for purposes of determining such cost drivers and the eligibility of a small business concern, as described in subsection (a)(4)(A)— (i) high volume medical procedures that are paid for under the Medicare program; (ii) diseases or conditions that a high number of Medicare beneficiaries are affected by; (iii) high cost medical procedures that are paid for under the Medicare program; (iv) diseases or conditions that Medicare beneficiaries are affected by that result in a high cost to the Medicare program; and (v) areas described in clauses (i) through (iv) for which there is a high potential for innovation or cost reduction. (C) Application requirement Each eligible small business concern that applies for a Medicare commercialization grant shall include in the application for such grant a description of each source of funding for the eligible business concern and the amount of funding from each such source. (4) Duration An eligible small business concern may receive a Medicare commercialization grant for a period of not less than 1 year and not more than 3 years. (5) No limit on number of recipients The Secretary shall not limit the number of eligible small business concerns that may receive a Medicare commercialization grant. (6) Periodic assessment At the completion of the third year for which grants are awarded under this subsection, the Secretary shall prepare an assessment containing information about the cost reductions and improvements in care that result from such grants, including— (A) a general assessment of the cost drivers that the grants were intended to address; (B) information about the novel eligible medical products that the grantees developed or received approval or clearance for with the aid of grant funding under this subsection; and (C) the potential for a reduction in costs that may result if such novel eligible medical products were used nationwide. (7) Report The Secretary shall prepare and submit to Congress, at the completion of the third year for which grants are awarded under this subsection and following the assessment described in paragraph (6), a summary report containing the information described in paragraph (6). The Secretary shall also post each such report on the website of the Department of Health and Human Services. (8) Funding To carry out the grant program under this subsection, the Secretary shall use amounts allocated for the SBIR and STTR programs of the Department of Health and Human Services under subsections (f) and (n), respectively, of section 9 of the Small Business Act ( 15 U.S.C. 638 (9) Collaboration The Secretary shall collaborate with the heads of other divisions within the Department of Health and Human Services as the Secretary determines necessary to carry out this subsection. (c) Pilot program for parallel review of medical products (1) In General Not later than 60 days after the date of enactment of this section, the Secretary and the Administrator shall jointly establish a pilot program for parallel review of eligible medical products that is similar to the Pilot Program for Parallel Review of Medical Products pilot program 21 U.S.C. 301 (2) Purpose The purposes of the pilot program are to— (A) reduce the timeline of the review processes for purposes of approval by the Food and Drug Administration under the Federal Food, Drug, and Cosmetic Act ( 21 U.S.C. 301 (B) increase the efficiency of, and communication between, the Department of Health and Human Services and the Centers for Medicare & Medicaid Services. (3) Eligible participants The pilot program established under this subsection shall be available— (A) only to recipients of a Medicare commercialization grant under this subsection (b) who choose to participate in such pilot program; and (B) only for the review of eligible medical products. (4) Parallel review process As part of the pilot program— (A) to the extent practicable, the Secretary and the Administrator shall notify participating grant recipients of the data that may be necessary for the grant recipient to submit at the beginning of the review process; and (B) the Administrator shall begin review for purposes of a reimbursement designation and a national coverage determination under the Medicare program under title XVIII of the Social Security Act for an eligible medical product while the Secretary of Health and Human Services is reviewing that eligible medical product for approval under the Federal Food, Drug, and Cosmetic Act ( 21 U.S.C. 301 (5) Allocation of resources The Administrator shall allocate the resources necessary to carry out the pilot program.

Summary: Reducing Medicare Costs through Innovation Act This bill establishes a Medicare commercialization grant program, through which the Centers for Medicare & Medicaid Services (CMS) shall award grants to eligible small businesses for certain activities related to developing novel eligible medical products and receiving Food and Drug Administration (FDA) approval for such products. CMS shall solicit grant applications annually, with a focus on the diseases or conditions that are the top ten cost drivers in the Medicare program. To carry out the grant program, CMS shall use amounts allocated under the Small Business Act for the Small Business Innovation Research and Small Business Technology Transfer programs. The bill also establishes a pilot program (similar to a pilot program that was previously established in regulation) for parallel review of medical products with the purpose of reducing, with respect to certain medical products developed by Medicare commercialization grant recipients, the timeline for FDA approval and Medicare national coverage determinations. A Medicare commercialization grant applicant may choose to apply for FDA approval of novel medical products either through a traditional process or through the pilot program.