I 
119TH CONGRESS 
1ST SESSION H. R. 3731 
To amend title XI of the Social Security Act to establish a research and 
development-intensive small biotech manufacturer exception from the 
Medicare drug price negotiation program. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 4, 2025 
Mr. PFLUGER (for himself and Mr. KUSTOFF) 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 subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend title XI of the Social Security Act to establish 
a research and development-intensive small biotech man-
ufacturer exception from the Medicare drug price nego-
tiation program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Biotech Innova-
tion Act’’. 
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SEC. 2. RESEARCH AND DEVELOPMENT-INTENSIVE SMALL 
BIOTECH MANUFACTURER EXCEPTION FROM 
MEDICARE DRUG PRICE NEGOTIATION PRO-
GRAM. 
Section 1192(d)(2) of the Social Security Act (42 
U.S.C. 1320f–1(d)(2)) is amended by adding at the end 
the following new subparagraph: 
‘‘(D) RESEARCH
AND
DEVELOPMENT-IN-
TENSIVE SMALL BIOTECH MANUFACTURER EX-
CEPTION FOR 2029 AND SUBSEQUENT YEARS.— 
‘‘(i) IN
GENERAL.—With respect to 
initial price applicability years (beginning 
with initial price applicability year 2029), 
subject to the succeeding provisions of this 
subparagraph, the term ‘negotiation eligi-
ble drug’ shall not include a qualifying sin-
gle source drug (as defined in subsection 
(e)) of a research and development-inten-
sive small biotech manufacturer (as de-
fined in clause (ii)). 
‘‘(ii) DEFINITIONS.—In this subpara-
graph: 
‘‘(I) APPLICABLE
PERCENT.— 
The 
term 
‘applicable 
percent’ 
means— 
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‘‘(aa) in the case of a small 
biotech manufacturer that has 1 
qualifying single source drug, 30 
percent; 
‘‘(bb) in the case of a small 
biotech manufacturer that has 2 
qualifying single source drugs, 40 
percent; 
‘‘(cc) in the case of a small 
biotech manufacturer that has 3 
qualifying single source drugs, 50 
percent; 
‘‘(dd) in the case of a small 
biotech manufacturer that has 4 
qualifying single source drugs, 60 
percent; and 
‘‘(ee) in the case of a small 
biotech manufacturer that has 5 
qualifying single source drugs, 70 
percent. 
‘‘(II) SMALL BIOTECH MANUFAC-
TURER
DEFINED.—The term ‘small 
biotech manufacturer’ means a manu-
facturer that— 
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‘‘(aa) has 5 or less quali-
fying single source drugs; and 
‘‘(bb) is not owned by, con-
trolled by, or subject to the juris-
diction or direction of a govern-
ment of a foreign country, or or-
ganized under the laws of a for-
eign country that is a covered na-
tion 
(as 
defined 
in 
section 
4872(f) of title 10, United States 
Code). 
‘‘(III) RESEARCH AND DEVELOP-
MENT-INTENSIVE
SMALL
BIOTECH 
MANUFACTURER DEFINED.—The term 
‘research and development-intensive 
small biotech manufacturer’ means a 
small biotech manufacturer that in-
vests at least the applicable percent of 
their net revenue from the average of 
the previous three years in research 
and development (determined based 
on generally accepted accounting prin-
ciples). 
‘‘(iii) TREATMENT IN CASE OF ACQUI-
SITION.—A drug shall not be considered to 
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be a qualifying single source drug of a re-
search and development-intensive small 
biotech manufacturer if the manufacturer 
of such drug is acquired after 2029 by an-
other manufacturer that does not meet the 
definition of a research and development- 
intensive small biotech manufacturer, ef-
fective at the beginning of the plan year 
immediately following such acquisition. 
‘‘(iv) 
ANNUAL
APPLICATION.—In 
order for a qualifying single source drug of 
a research and development-intensive small 
biotech manufacturer to be eligible for the 
exception under this subparagraph with re-
spect to an initial price applicability year 
(beginning with initial price applicability 
year 2029), the manufacturer shall submit 
an application to the Secretary (at a time 
specified by the Secretary) containing— 
‘‘(I) information on the net prod-
uct revenue and research and develop-
ment expenditures of the manufac-
turer during the relevant time period; 
‘‘(II) a certification that the in-
formation submitted by the manufac-
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turer under subclause (I) is accurate 
and complete to the best of the manu-
facturer’s knowledge; and 
‘‘(III) such other information as 
the Secretary may specify. 
‘‘(v) 
DISPUTE
RESOLUTION.—The 
Secretary shall develop a process under 
which a manufacturer may appeal a deter-
mination by the Secretary that the manu-
facturer is not a research and develop-
ment-intensive small biotech manufacturer. 
Such process shall conclude, with respect 
to a manufacturer, not later than the se-
lected drug publication date with respect to 
the initial price applicability year for which 
the manufacturer submitted an application 
under clause (iv).’’. 
Æ 
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