Title: Medical Innovation Act of 2017
Policy area: Health

Summary:
Medical Innovation Act of 2017
This bill amends the Public Health Service Act to require certain drug manufacturers to make payments to fund research supported by the Food and Drug Administration (FDA) and the National Institutes of Health (NIH).
A drug manufacturer with over $1 billion in net income in a fiscal year that has entered into a settlement agreement in the previous five years with a federal agency regarding specified violations must pay 0.75%-1.5% of its net income to the Department of Health and Human Services (HHS) for each of its covered blockbuster drugs. A covered blockbuster drug is a drug that has at least $1 billion in net sales in a year and was developed, in whole or in part, through federal investments in medical research, including a drug for which a patent contains information that relates to, or is based upon, federally funded research.
Each fiscal year, HHS must publish a list of manufacturers that make payments, each manufacturer's covered blockbuster drugs, and payment amounts.
Payments are divided between the FDA and the NIH in proportion to the discretionary funding of those agencies, excluding FDA user fees. Payments are not disbursed if appropriations for the FDA or the NIH are lower than in the prior fiscal year.
The FDA's priority use for payments must include advancing regulatory science for medical products.
The NIH's priority use for payments must include supporting: (1) research that fosters radical innovation, (2) research that advances fundamental knowledge and technology, (3) research related to diseases that disproportionately account for federal health care spending, and (4) early career scientists.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2172 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 2172

   To authorize the collection of supplemental payments to increase 
 congressional investments in medical research, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 29, 2017

 Ms. Warren (for herself, Mr. Brown, Mrs. Gillibrand, Mr. Franken, Ms. 
 Baldwin, Mr. Sanders, and Ms. Harris) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
   To authorize the collection of supplemental payments to increase 
 congressional investments in medical research, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Innovation Act of 2017''.

SEC. 2. AUTHORITY TO ASSESS AND USE SUPPLEMENTAL PAYMENTS TO INCREASE 
              CONGRESSIONAL INVESTMENTS IN MEDICAL RESEARCH.

    (a) In General.--Section 301 of the Public Health Service Act (42 
U.S.C. 241) is amended by adding at the end the following:
    ``(i) Authority To Assess and Use Supplemental Payments To Increase 
Congressional Investments in Medical Research.--
            ``(1) Definitions.--For purposes of this subsection:
                    ``(A) Covered blockbuster drug.--
                            ``(i) In general.--The term `covered 
                        blockbuster drug' means any product--
                                    ``(I) for which the covered 
                                manufacturer reported to the Securities 
                                and Exchange Commission on a form, 
                                including form 10-K or form 20-F, or is 
                                otherwise determined by the Secretary 
                                to have received, at least 
                                $1,000,000,000 in net sales in the 
                                previous calendar year; and
                                    ``(II) that was developed, in whole 
                                or in part, through Federal Government 
                                investments in medical research, as the 
                                Secretary determines in accordance with 
                                clause (ii).
                            ``(ii) Determination of federal government 
                        investment.--In determining under clause 
                        (i)(II) whether a product was developed, in 
                        whole or in part, through Federal Government 
                        investments in medical research, the Secretary 
                        shall consider whether information included in 
                        any patent that claims the covered blockbuster 
                        drug or that claims a method of using such 
                        covered blockbuster drug and with respect to 
                        which a claim of patent infringement could 
                        reasonably be asserted if a person not licensed 
                        by the owner engaged in the manufacture, use, 
                        or sale of the covered blockbuster drug, or any 
                        element of the covered blockbuster drug--
                                    ``(I) relates to, or is based upon, 
                                prior science conducted, in whole or in 
                                part, by a person that is or was funded 
                                by the Federal Government;
                                    ``(II) relates to, acts upon, or is 
                                based upon knowledge of a signaling 
                                pathway, cellular receptor, ion 
                                channel, protein, DNA or RNA sequence 
                                or mutation, virus, or any other 
                                scientific information discovered, in 
                                whole or in part, through research 
                                funded by the Federal Government; or
                                    ``(III) relates to, or is based 
                                upon, through the manufacturing process 
                                or testing process of the covered 
                                blockbuster drug, technology derived, 
                                in whole or in part, through research 
                                funded by the Federal Government.
                    ``(B) Covered manufacturer.--The term `covered 
                manufacturer' means a person--
                            ``(i) that holds an application approved 
                        under section 505 of the Federal Food, Drug, 
                        and Cosmetic Act or a license under section 351 
                        of this Act for a covered blockbuster drug; or
                            ``(ii) who is a co-licensed partner of the 
                        person described in clause (i) that obtains the 
                        covered blockbuster drug directly from a person 
                        described in this clause or clause (i).
                    ``(C) Covered settlement agreement.--
                            ``(i) In general.--The term `covered 
                        settlement agreement' means a settlement 
                        agreement (including a consent decree), and 
                        except as provided under clause (ii)--
                                    ``(I) that is between an agency and 
                                a covered manufacturer;
                                    ``(II) that relates to--
                                            ``(aa) an alleged violation 
                                        of, or a penalty under, section 
                                        1128A of the Social Security 
                                        Act or section 1128B of the 
                                        Social Security Act;
                                            ``(bb) an alleged violation 
                                        under subchapter III of chapter 
                                        37 of title 31, United States 
                                        Code (commonly known as the 
                                        `False Claims Act');
                                            ``(cc) an alleged violation 
                                        under the Federal Food, Drug, 
                                        and Cosmetic Act; or
                                            ``(dd) an alleged violation 
                                        of any other Federal civil or 
                                        criminal law; and
                                    ``(III) under the terms of which a 
                                covered manufacturer is obligated in an 
                                amount not less than a total of 
                                $1,000,000, including civil or criminal 
                                penalties with respect to any parties, 
                                including governmental and private 
                                entities.
                            ``(ii) Exception for settlements not 
                        affecting taxpayers or public health.--The term 
                        `covered settlement agreement' does not include 
                        any settlement agreement that the Secretary 
                        determines--
                                    ``(I) does not involve an alleged 
                                criminal violation; and
                                    ``(II) does not to relate to--
                                            ``(aa) allegations of fraud 
                                        resulting, or potentially 
                                        resulting, in a loss of 
                                        taxpayer dollars; or
                                            ``(bb) allegations of 
                                        conduct having an adverse 
                                        impact, or a potentially 
                                        adverse impact, on the health 
                                        of the public.
                    ``(D) Person.--The term `person' has the meaning 
                given such term in section 201(e) of the Federal Food, 
                Drug, and Cosmetic Act.
                    ``(E) Product.--The term `product' means a drug 
                approved under section 505 of the Federal Food, Drug, 
                and Cosmetic Act or licensed under section 351, and 
                subject to section 503(b)(1) of the Federal Food, Drug, 
                and Cosmetic Act.
            ``(2) Supplemental payments to increase congressional 
        investments in medical research.--
                    ``(A) Supplemental payment assessment and 
                collection.--Beginning with the first fiscal year that 
                begins at least 60 days after the date of enactment of 
                the Medical Innovation Act of 2017, and each subsequent 
                fiscal year, the Secretary shall, in accordance with 
                this paragraph, assess and collect supplemental 
                payments to increase congressional investments in 
                medical research from each covered manufacturer 
                described in subparagraph (B).
                    ``(B) Criteria for assessing payments.--A covered 
                manufacturer that meets both of the following criteria 
                for a calendar year (referred to in this subparagraph 
                and subparagraph (D) as the `applicable calendar year') 
                shall be assessed a supplemental payment under 
                subparagraph (A) for the fiscal year beginning in the 
                proceeding calendar year:
                            ``(i) A covered manufacturer that, during 
                        the 5-year period immediately preceding the 
                        date on which the payment is assessed, but not 
                        before the date of enactment of the Medical 
                        Innovation Act of 2017, entered into a covered 
                        settlement agreement.
                            ``(ii) A covered manufacturer that reported 
                        net income of at least $1,000,000,000 to the 
                        Securities and Exchange Commission on a form, 
                        including form 10-K or form 20-F, or that the 
                        Secretary otherwise determines to have had net 
                        income of at least $1,000,000,000--
                                    ``(I) during the applicable 
                                calendar year; or
                                    ``(II) during the calendar year in 
                                which the covered manufacturer entered 
                                into a covered settlement agreement, as 
                                described in clause (i).
                    ``(C) Payment amount.--
                            ``(i) In general.--A covered manufacturer 
                        described in subparagraph (B) shall be assessed 
                        a supplemental payment to increase 
                        congressional investments in medical research 
                        for a fiscal year equal to the applicable 
                        percentage of the net income of the covered 
                        manufacturer, as reported or determined as 
                        described in subparagraph (B)(ii), for the 
                        previous calendar year, multiplied by the 
                        number of covered blockbuster drugs of the 
                        covered manufacturer for that year.
                            ``(ii) Applicable percentage.--For purposes 
                        of determining the amount of a supplemental 
                        payment under clause (i), the applicable 
                        percentage of the net income of a covered 
                        manufacturer is--
                                    ``(I) 0.75 percent, in the case of 
                                a covered settlement agreement under 
                                the terms of which the total obligation 
                                of a covered manufacturer is in an 
                                amount that is less than $500,000,000;
                                    ``(II) 1 percent, in the case of a 
                                covered settlement agreement under the 
                                terms of which the total obligation of 
                                a covered manufacturer is in an amount 
                                that is at least $500,000,000 but less 
                                than $1,000,000,000; or
                                    ``(III) 1.5 percent, in the case of 
                                a covered settlement agreement under 
                                the terms of which the total obligation 
                                of a covered manufacturer is in an 
                                amount that is at least $1,000,000,000.
                    ``(D) Annual limitation.--In the case of a covered 
                manufacturer that entered into more than 1 covered 
                settlement agreement during an applicable calendar 
                year, such covered manufacturer shall be assessed a 
                supplemental payment under subparagraph (C) only with 
                respect to the covered settlement agreement under which 
                the total amount obligated of the covered manufacturer, 
                as described in paragraph (1)(C)(i)(III), is the 
                highest.
                    ``(E) Publication of payments.--Beginning with the 
                first fiscal year that begins at least 60 days after 
                the date of enactment of the Medical Innovation Act of 
                2017, and not later than 60 days before the start of 
                each fiscal year, the Secretary shall publish in the 
                Federal Register, with respect to the next fiscal 
                year--
                            ``(i) a list of covered manufacturers 
                        subject to the payment under this paragraph;
                            ``(ii) a list of the covered blockbuster 
                        drugs of each such covered manufacturer;
                            ``(iii) the total payment amount assessed 
                        to each such covered manufacturer; and
                            ``(iv) the manner in which payments 
                        assessed under this paragraph will be 
                        collected.
                    ``(F) Crediting and availability of supplemental 
                payments.--
                            ``(i) In general.--Subject to clause (ii), 
                        payments authorized under this paragraph shall 
                        be collected and available for obligation only 
                        to the extent and in the amount provided in 
                        advance in appropriations Acts. Such payments 
                        are authorized to remain available until 
                        expended.
                            ``(ii) Collections and appropriations 
                        acts.--
                                    ``(I) In general.--The payments 
                                authorized by this paragraph--
                                            ``(aa) subject to subclause 
                                        (II), shall be collected and 
                                        available in each fiscal year 
                                        in an amount not to exceed the 
                                        amount specified in 
                                        appropriation Acts, or 
                                        otherwise made available for 
                                        obligation, for such fiscal 
                                        year; and
                                            ``(bb) shall be available 
                                        to the Secretary to distribute, 
                                        as described in paragraph (3).
                                    ``(II) Provision for early 
                                payments.--Payments authorized under 
                                clause (iii) for a fiscal year, prior 
                                to the due date for such payments, may 
                                be accepted by the Secretary.
                            ``(iii) Authorization of appropriations.--
                        For the first fiscal year that begins at least 
                        60 days after the date of enactment of the 
                        Medical Innovation Act of 2017 and for each 
                        subsequent fiscal year, there is authorized to 
                        be appropriated for the purpose of making 
                        distributions under paragraph (3) to meet the 
                        priorities described in paragraph (4), an 
                        amount equal to the total amount of 
                        supplemental payments assessed for such fiscal 
                        year under this paragraph.
                    ``(G) Remitting payments.--A covered manufacturer 
                assessed a supplemental payment under subparagraph (A) 
                shall remit the payment no later than the first 
                business day on or after October 1 of each fiscal year, 
                or the first business day after the date of enactment 
                of an appropriations Act providing for the collection 
                and obligation of supplemental payments for such fiscal 
                year.
                    ``(H) Collection of assessed payments that are not 
                remitted.--In any case where the Secretary does not 
                receive a supplemental payment assessed under 
                subparagraph (A) within 30 days after it is due, such 
                supplemental payment shall be treated as a claim of the 
                United States Government subject to subchapter II of 
                chapter 37 of title 31, United States Code.
                    ``(I) Supplement not supplant.--Payments collected 
                under this paragraph shall be used to supplement and 
                not supplant other Federal funds made available to 
                carry out the priorities described in paragraph (4).
            ``(3) Distribution of payments to agencies to increase 
        congressional investments in medical research.--
                    ``(A) Distribution to agencies.--Subject to 
                subparagraph (C), for the purposes described in 
                paragraph (4), the Secretary shall distribute the 
                amounts appropriated under paragraph (2)(F)(iii) during 
                a fiscal year to--
                            ``(i) the Food and Drug Administration, to 
                        be used in accordance with paragraph (4)(A); 
                        and
                            ``(ii) the National Institutes of Health 
                        organized under title IV, to be used in 
                        accordance with paragraph (4)(B).
                    ``(B) Distribution ratio between agencies.--The 
                amount that the Secretary distributes to an agency 
                under subparagraph (A) during a fiscal year shall bear 
                the same relation to the total amount appropriated 
                under paragraph (2)(F)(iii) for such fiscal year as the 
                amount of discretionary funds appropriated to such 
                agency for such fiscal year bears to the total amount 
                of discretionary funding appropriated to both agencies 
                listed in subparagraph (A) for such fiscal year.
                    ``(C) Ensuring stable congressional investments in 
                medical research.--
                            ``(i) In general.--Supplemental payments 
                        collected in accordance with paragraph (2) 
                        shall not be distributed under subparagraph (A) 
                        for a fiscal year unless appropriations to both 
                        of the agencies listed in such subparagraph for 
                        the fiscal year are equal to or greater than 
                        appropriations to such agencies for the prior 
                        fiscal year.
                            ``(ii) Delayed distribution.--If, in 
                        accordance with clause (i), the Secretary does 
                        not distribute payments collected in accordance 
                        with paragraph (2) during any portion of a 
                        fiscal year, and, at a later date in such 
                        fiscal year, the appropriations to the agencies 
                        listed in subparagraph (A) become equal to or 
                        greater than the amount of appropriations for 
                        the prior fiscal year, the Secretary may 
                        distribute such payment at any time in such 
                        fiscal year.
                    ``(D) Considerations.--In determining amounts 
                appropriated for purposes of subparagraphs (B) and 
                (C)--
                            ``(i) the Secretary shall not consider any 
                        amounts appropriated in accordance with 
                        paragraph (2)(F)(iii); and
                            ``(ii) with respect to the Food and Drug 
                        Administration, the Secretary shall not 
                        consider amounts appropriated in accordance 
                        with subchapter C of chapter VII of the Federal 
                        Food, Drug, and Cosmetic Act (relating to user 
                        fees collected by the Secretary).
            ``(4) Prioritizing urgent needs in medical research.--The 
        Secretary shall ensure that the payments distributed under 
        paragraph (3) are used to meet urgent needs in medical 
        research, including priorities as follows:
                    ``(A) FDA.--With respect the Food and Drug 
                Administration, the priority use of the distributions 
                shall include carrying out the goals of the strategy 
                and implementation plan for advancing regulatory 
                science for medical products under section 1124 of the 
                Food and Drug Administration Safety and Innovation Act 
                (21 U.S.C. 393 note), and other such research 
                activities in order to promote the public health and 
                advance innovation in regulatory decisionmaking, as 
                determined by the Secretary.
                    ``(B) NIH.--With respect to the National Institutes 
                of Health, the priority use of the distributions shall 
                include supporting--
                            ``(i) research that fosters radical 
                        innovation, including--
                                    ``(I) research on diseases or 
                                conditions for which treatments exist 
                                but are inadequate;
                                    ``(II) research on diseases or 
                                conditions for which there are unmet 
                                medical needs;
                                    ``(III) research on diseases for 
                                which treatments exist but the side 
                                effect profiles of such treatments 
                                limit the therapeutic potential of such 
                                treatments;
                                    ``(IV) research on new approaches 
                                to treatment or diagnosis of a disease 
                                using a drug, device, or therapy that, 
                                at the time of distribution, is not 
                                used or is underused; or
                                    ``(V) research to identify new 
                                biomarkers;
                            ``(ii) research that advances fundamental 
                        knowledge and technology even if it does not 
                        provide immediate or near-term clinical or 
                        therapeutic benefits, including research and 
                        technology that advances the understanding of 
                        biochemistry, biology, protein science, 
                        immunology, genetics, virology, microbiology, 
                        or neurology;
                            ``(iii) research related to diseases that 
                        disproportionally account for Federal health 
                        care spending, including spending under the 
                        Medicare program under title XVIII of the 
                        Social Security Act, the Medicaid program under 
                        title XIX of the Social Security Act, the State 
                        Children's Health Insurance Program under title 
                        XXI of the Social Security Act, the TRICARE 
                        program under chapter 55 of title 10, United 
                        States Code, and the hospital services and 
                        medical care provided through the Veterans' 
                        Administration under chapters 17 and 18 of 
                        title 38, United States Code, and tax credits 
                        made available through the amendments to the 
                        Internal Revenue Code of 1986 made by the 
                        Patient Protection and Affordable Care Act 
                        (Public Law 111-148), such as research relating 
                        to--
                                    ``(I) diseases that 
                                disproportionally impact older 
                                individuals;
                                    ``(II) degenerative diseases, and
                                    ``(III) chronic conditions; and
                            ``(iv) early career scientists by--
                                    ``(I) awarding research project 
                                grants that support discrete, 
                                specified, circumscribed projects to be 
                                performed by the investigator in an 
                                area representing the specific 
                                interests and competencies of such 
                                investigator, to investigators--
                                            ``(aa) who are within 10 
                                        years of completing a terminal 
                                        research degree; or
                                            ``(bb) who are within 10 
                                        years of completing a medical 
                                        residency;
                                    ``(II) awarding grants that support 
                                career development experiences that 
                                lead to earlier research independence; 
                                and
                                    ``(III) awarding grants that 
                                support innovative training programs 
                                that, in addition to scientific 
                                training, provide additional training 
                                to enhance employment opportunities, 
                                including training in management and 
                                business, to--
                                            ``(aa) graduate students;
                                            ``(bb) post-doctoral 
                                        fellows;
                                            ``(cc) individuals within 
                                        10 years of completing a 
                                        terminal research degree; or
                                            ``(dd) individuals within 
                                        10 years of completing a 
                                        medical residency.
            ``(5) Annual reports.--
                    ``(A) Secretary of health and human services.--Not 
                later than 180 calendar days before the end of a fiscal 
                year in which the Secretary has assessed supplemental 
                payments under paragraph (2), the Secretary shall 
                submit a report to the Committee on Health, Education, 
                Labor, and Pensions of the Senate and the Committee on 
                Energy and Commerce of the House of Representatives, 
                which shall include a description of supplemental 
                payments assessed, collected, and distributed under 
                this subsection for such fiscal year, and a list of the 
                covered manufacturers that were assessed supplemental 
                payments and the amount of such assessments.
                    ``(B) FDA and nih.--For each fiscal year in which 
                amounts are distributed under paragraph (3), the Food 
                and Drug Administration and the National Institutes of 
                Health shall report on the use and impact of such 
                amounts in the annual budget submission of such 
                entity.''.
    (b) Effect of Failure To Remit Payment.--Section 502 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 352) is amended by adding at 
the end the following:
    ``(ee) If it is a drug that is a covered blockbuster drug (as 
defined in section 301(i)(1) of the Public Health Service Act) for 
which any payment assessed under section 301(i)(2) of such Act has not 
been paid in accordance with such section, until such payment is 
made.''.
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