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 expendi-
tures for drugs approved for marketing, and for other
purposes.
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 ‘‘Health Care Research
and Development and Consumer Protection Act’’.
SEC. 2. FINDINGS.
The Congress makes the following findings:
(1) Public health needs are advanced by the de-
velopment and distribution of new drug therapies
(2) The public interest in the development of
new drug therapies is parallel to the public interest
in controlling public and private health care costs.
(3) The Federal Government needs mechanisms
to ensure that portions of revenues from the sale of
drugs to consumers are reinvested in the research
and development of new technologies.
(4) The Federal Government is the single larg-
est supporter of biomedical research in the world,
spending $33 billion in 1994 alone for biomedical
and related health research.
(5) The Federal Government provides 80 per-
cent of the monies spent each year for fundamental
biomedical research at universities, medical schools,
and other non-profit institutions.
(6) Of all the cancer drugs developed since the
founding of the National Cancer Institute’s new
drug program in 1955 and approved for marketing
by the Food and Drug Administration through
1992, 34 of 37 cancer drugs, or 92 percent, were de-
veloped with taxpayer funds.
(7) The public should not have to pay twice for
health care inventions, first as taxpayers and second
as consumers.
(8) The Department of Health and Human
Services has the responsibility for funding basic bio-
medical research, for funding medical treatment
through the programs under titles XVIII and XIX
of the Social Security Act, for providing direct medi-
cal care, and, more generally, for protecting the
health and safety of the public, it is incumbent upon
the Secretary of Health and Human Services to re-
quire a reasonable relationship between the pricing
of drugs, the public investment in those drugs, and
the health and safety needs of the public.
(9) The Department of Health and Human
Services, academic researchers, and the general pub-
lic have the right to know, but lack the necessary in-
formation about, information about the actual costs
for drug development, the general revenues gen-
erated from the sale of pharmaceutical drugs, and
the taxpayer’s investment in new drug development.
(10) The Department of Health and Human
Services lacks the necessary information to make ap-
propriate decisions about the reasonableness of drug
prices or the impact of its policies on research and
development of new medical technologies.
SEC. 3. REPORT ON RESEARCH OF THE FEDERAL GOVERN-
MENT.
(a) INVOLVEMENT
OF
THE
FEDERAL
GOVERN-
MENT.—For each drug for which an application under sec-
tion 505, 507, or 512 of the Federal Food, Drug, and
Cosmetic Act has been approved the following shall be re-
ported to the Secretary of Health and Human Services:
(1) Each patent, cooperative research and de-
velopment agreement under section 12 of the Ste-
venson-Wydler Technology Innovation Act of 1980,
or other contractual agreement with the Federal
Government which contributed to the development of
the drug. The dollar amount of Federal funds ex-
pended, the agency of the Federal Government
which provided such funds, the dates of any contrac-
tual agreements, and the nature of the research and
development activity shall be included in the report.
(2) Each grant, contract, or other funding
mechanism of the Federal Government which was
used to support research or development activities
with respect to the drug, including any grant or con-
tract by the Federal Government to an institution of
higher education or other non profit institution or
other funds expended by the Federal Government on
research and development which directly contributed
to the development of the drug. The dollar amount
of Federal funds expended, the agency of the Fed-
eral Government which provided such funds, the
dates of any contractual agreements, and the nature
of the research and development activity shall be in-
cluded in the report.
The Secretary shall make such report available to the pub-
lic.
(b) RESEARCH AND DEVELOPMENT.—
(1) IN GENERAL.—For each drug for which an
application under section 505, 507, or 512 of the
Federal Food, Drug, and Cosmetic Act has been ap-
proved the total amount expended for each type of
research and development of the drug in each cal-
endar year, including pre-clinical research and phase
I, II, and III clinical trials, the entity which made
the expenditures, and the amount provided by the
Federal Government shall be reported to the Sec-
retary of Health and Human Services.
(2) PUBLIC DISCLOSURE OF DATA.—If a drug
is protected under section 527(a) of the Federal
Food, Drug, and Cosmetic Act or under a patent,
the material reported under paragraph (1) for such
drug shall be made available by the Secretary to the
public. If a drug is not protected under such section
or a patent, the Secretary shall make the report
available to the public in a form which does not
identify individual entities.
SEC. 4. REASONABLE PRICE AGREEMENT.
(a) IN GENERAL.—If any Federal agency or any non-
profit entity undertakes federally funded health care re-
search and development and is to convey or provide a pat-
ent or other exclusive right to use such research and devel-
opment for a drug or other health care technology, such
agency or entity shall not make such conveyance or pro-
vide such patent or other right until the person who will
receive such patent or other right first agrees to a reason-
able pricing agreement with the Secretary of Health and
Human Services or the Secretary makes a determination
that the public interest is served by a waiver of the reason-
able pricing agreement provided in accordance with sub-
section (b).
(b) WAIVER.—No waiver shall take effect under sub-
section (a) before the public is given notice of the proposed
waiver and provided a reasonable opportunity to comment
on the proposed waiver. A decision to grant a waiver shall
set out the Secretary’s finding that such a waiver is in
the public interest.
SEC. 5. PURCHASE OF DRUGS DEVELOPED WITH TAXPAYER
SUPPORT.
For any drug approved for marketing by the Food
and Drug Administration which was developed with sig-
nificant Federal support, the Secretary of Health and
Human Services shall review the price of the drug for pur-
poses of determining a reasonable price for Federal reim-
bursements under the programs under titles XVIII and
XIX of the Social Security Act and other Federal pro-
grams that elect to participate in the Secretary’s reason-
able pricing program, In determining a reasonable price
for a drug, the Secretary shall consider—
(1) the public interest in continued health care
research and development,
(2) the contribution of the person marketing
such drug to the drug research and development ex-
penses, including the amount, timing, and risk of in-
vestment in such research and development,
(3) the contribution of the Federal Government
to the research and development of such drug, in-
cluding the amount, timing, and risk of investment
in such research and development,
(4) the therapeutic value of such drug,
(5) the number of patients who are expected to
purchase such drug,
(6) the cost of producing and marketing of such
drug,
(7) the cost of therapies which are similar to
the therapy using such drug, and
(8) other relevant factors.
SEC. 6. MATERIAL TRANSFER AGREEMENT.
If in connection with research and development for
health care technologies, the Secretary of Health and
Human Services determines that the public interest will
be advanced by the ability of the Secretary to conduct re-
search on biological substances or other materials, the
Secretary shall have the authority to compel the owner of
such substances or materials to provide the Secretary with
such substances or materials in accordance with a mate-
rials transfer agreement. The agreement shall—
(1) provide the owner of such substances or ma-
terials compensation for the costs incurred in mak-
ing the transfer to the Secretary;
(2) define the terms and conditions under which
the Secretary may use the materials;
(3) not grant rights in intellectual property or
rights for commercial purposes; and
(4) require that the material be used for re-
search purposes only.
SEC. 7. PROMOTION OF RESEARCH AND DEVELOPMENT.
(a) ACCOUNT.—Any person engaged in the manufac-
ture of drugs for introduction into interstate commerce
shall, in accordance with subsection (b), establish for each
drug an account for funds to be reinvested in research
and development for health care technologies.
(b) REINVESTMENT IN RESEARCH AND DEVELOP-
MENT.—To insure that adequate funds are being made
available for research and development of new health care
technologies, the Secretary of Health and Human Services
shall establish for persons engaged in the manufacture of
drugs for introduction into interstate commerce the mini-
mum amount such person should make available for re-
search and development of its new health care technologies
based upon a percentage of sales revenue for that drug.
The Secretary may require different percentages for mini-
mum reinvestment for different classes of drugs based
upon patient protection, orphan drug status, or magnitude
of sales.
(c) ADDITIONAL RULES.—The Secretary shall adopt
regulations concerning qualifying research and develop-
ment expenditures and the reporting requirements for per-
sons who are subject to subsections (a) and (b).
SEC. 8. REPORTS ON SALES.
Any person engaged in the manufacture and sale of
drugs approved under section 505, 507, or 512 of the Fed-
eral Food, Drug, and Cosmetic Act shall report to the
Health Care Financing Administration the total number
of each drug it has sold and the total revenue it has re-
ceived from such sales, including sales made outside the
United States.
SEC. 9. GOVERNMENT EXPENDITURE ON PRESCRIPTION
DRUGS.
The Secretary of Health and Human Services shall
report to the Congress annually on the estimate of the
amount of money the Federal government expends, di-
rectly or through reimbursement, for the purchase of pre-
scription drugs, including an estimate of the amount of
money expended each year on drugs which were developed
with significant Federal support.
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