Federal Research Product Commercialization Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Research Product 
Commercialization Act''.

SEC. 2. ESTABLISHMENT OF PROCESS REGARDING REASONABLE PRICES FOR 
              PRODUCTS DEVELOPED AS CONSEQUENCE OF FUNDING BY NATIONAL 
              INSTITUTES OF HEALTH.

    Part G of title IV of the Public Health Service Act (42 U.S.C. 289 
et seq.) is amended by inserting after section 498 the following 
section:

     ``reasonable prices for products developed with assistance of 
                               institutes

    ``Sec. 498B. (a) In General.--Subject to the provisions of this 
section, for fiscal year 1994 and subsequent fiscal years, a project of 
biomedical research relating to the development of a drug, device, or 
other tangible product may not be conducted or supported by any agency 
of the National Institutes of Health unless there are in effect such 
regulations issued by the Secretary as may be necessary to ensure that, 
in the event the product is (in accordance with applicable law) to be 
made available to the public, there is compliance with the following:
            ``(1) The research entity, in accordance with this section, 
        will ensure that the commercial parties involved make the 
        product available to the public at a reasonable price, and that 
        the commercial parties pay to the National Institutes of Health 
        royalties reasonably related to the amounts expended by such 
        Institutes with respect to the product.
            ``(2) For purposes of paragraph (1), the research entity 
        will conduct a competitive process of bidding in order to 
        select entities to serve as commercial parties regarding the 
        product. With respect to such bidding, a solicitation of 
        applications containing bids will be published in the Federal 
        Register.
            ``(3) Applicants under paragraph (2) will not be approved 
        by the research entity as commercial parties regarding the 
        project unless the following conditions are met:
                    ``(A) The application specifies a formula for 
                determining the price at which the product will be made 
                available to the public, and the formula results in a 
                price that is in accordance with paragraph (1).
                    ``(B) The application specifies the royalties to be 
                paid to the National Institutes of Health, and the 
                royalties are in accordance with paragraph (1).
                    ``(C) The application demonstrates that the 
                applicant possesses the appropriate biomedical and 
                commercial expertise.
                    ``(D) The application is in such form, is made in 
                such manner, and contains such other information as the 
                Secretary may require.
            ``(4)(A) Subject to subparagraph (B), in selecting 
        commercial parties under paragraph (3), the research entity 
        will, if there are a sufficient number of qualified applicants, 
        approve such applications as may be necessary to ensure that 
        commercial parties compete in making the product available to 
        the public.
            ``(B) The research entity will comply with subparagraph (A) 
        only to the extent not inconsistent with paragraph (1).
            ``(5)(A) If there is an insufficient number of qualified 
        applicants to provide for competing commercial parties, the 
        research entity will, in approving applications to provide for 
        an exclusive arrangement for making the product available to 
        the public, require that the applicants negotiate prices and 
        royalties under paragraph (1) with the Secretary.
            ``(B) If an exclusive arrangement under subparagraph (A) is 
        to be made, the Secretary will publish in the Federal Register 
        a notice of such fact.
            ``(C) An exclusive arrangement under subparagraph (A) will 
        not become legally binding until the expiration of the 90-
        period beginning on the date on which the notice required in 
        subparagraph (B) with respect to the arrangement is published 
        in the Federal Register.
    ``(b) Applicability.--Subsection (a) applies with respect to a 
drug, device, or other tangible product only if the project of research 
involved provides a material contribution to achieving status as a 
drug, device, or other product that, under applicable law, is permitted 
to be made available to the public.
    ``(c) Required Agreements.--With respect to a project of research 
described in subsection (a), regulations under such subsection shall, 
in the case of the non-Federal entities involved, impose the 
requirements of this section as required agreements between such 
entities and the National Institutes of Health, including (if the 
project is supported by such Institutes) imposing the requirements as 
conditions of the receipt from such Institutes of the award of the 
grant, cooperative agreement, or contract for the conduct of the 
project. Conditions for such awards shall, as necessary, include 
conditions governing the arrangements that the research entity involved 
makes with entities to serve as commercial parties regarding the drug, 
device, or other tangible product involved, without regard to whether 
the National Institutes of Health is a direct party to such 
arrangements.
    ``(d) Consultations Regarding Regulations.--In issuing regulations 
pursuant to subsection (a), the Secretary shall consult with the 
Director of NIH and with the Administrator of the Health Care Financing 
Administration.
    ``(e) Definitions.--For purposes of this section:
            ``(1) The term `commercial parties' means the parties that 
        make available to the public a drug, device, or other tangible 
        product.
            ``(2) The term `make available', with respect to the use by 
        the public of a drug, device, or other tangible product, 
        means--
                    ``(A) to manufacture the product; or
                    ``(B) to sell or trade the product, or to offer to 
                sell or trade the product.
            ``(3) The term `product' means a drug, device, or other 
        tangible product.
            ``(4)(A) The term `research entity', with respect to 
        project of biomedical research described in subsection (a), 
        means the entity with the principal property interest in the 
        results of the research, without regard to whether the entity 
        is the National Institutes of Health or a non-Federal entity.
            ``(B) An entity is a research entity under subparagraph (A) 
        without regard to whether the property interest in the results 
        of the project involved--
                    ``(i) is directly in the drug, device, or other 
                product that is the subject of the project; or
                    ``(ii) is only in findings that relate to the 
                product.''.

Summary: Federal Research Product Commercialization Act - Amends the Public Health Service Act to require that a biomedical research project relating to the development of a drug, device, or other tangible product may not be supported by the National Institutes of Health (NIH) unless there is in effect an agreement ensuring that any commercial parties involved in the project make the product available to the public at a reasonable price and that the commercial parties pay NIH royalties reasonably related to the amounts NIH spent with respect to the product.