Title: Expanding Access to Affordable Prescription Drugs and Medical Devices Act
Policy area: Health

Summary:
Expanding Access to Affordable Prescription Drugs and Medical Devices Act
This bill requires the Department of Health and Human Services (HHS) to provide assistance to certain nonprofit manufacturers of drugs or medical devices, establishes requirements in statute for a manufacturer to qualify as a tax-exempt nonprofit organization, and addresses related issues.
Generally, to be a tax-exempt nonprofit drug (or biological product) or device manufacturer under this bill, an organization must (1) only manufacture drugs or devices that further a public health objective, such as addressing barriers related to availability or price; (2) sell each drug or device at a public list price that is not above a certain amount as determined by various costs; (3) not compensate any employee an amount more than 40 times the compensation of the lowest-compensated employee or applicable contractor; and (4) meet various existing requirements for being a tax-exempt organization.
HHS must provide assistance to tax-exempt nonprofit organizations that meet certain requirements by awarding cooperative agreements, providing low-interest revolving loans, and waiving certain user fees. For awarding such cooperative agreements and loans, HHS shall prioritize organizations expecting to market an eligible drug or device (1) at a price lower than existing treatments, or (2) that HHS has identified as a public health priority.
The Food and Drug Administration may prioritize the review of an application for market approval of a qualifying drug or medical device from a tax-exempt nonprofit organization if the organization commits to a specific price that is significantly lower than similar treatments on the market.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2257 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  1st Session
                                S. 2257

To provide Federal support for nonprofit generic and essential medicine 
  and device manufacturers to increase the availability of drugs and 
devices in order to reduce drug or device shortages and drug and device 
                                 costs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 24, 2021

   Ms. Rosen introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To provide Federal support for nonprofit generic and essential medicine 
  and device manufacturers to increase the availability of drugs and 
devices in order to reduce drug or device shortages and drug and device 
                                 costs.

    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 ``Expanding Access to Affordable 
Prescription Drugs and Medical Devices Act''.

SEC. 2. SUPPORTING NONPROFIT GENERIC AND ESSENTIAL MEDICINES AND DEVICE 
              MANUFACTURERS.

    (a) In General.--Part P of title III of the Public Health Service 
Act (42 U.S.C. 280g et seq.) is amended by adding at the end the 
following:

``SEC. 399V-7. SUPPORTING NONPROFIT GENERIC AND ESSENTIAL MEDICINES AND 
              DEVICE MANUFACTURERS.

    ``(a) In General.--The Secretary shall award cooperative agreements 
and low interest revolving loans to, and waive user fees with respect 
to, nonprofit entities to support the manufacture and distribution 
within the United States of eligible drugs and eligible devices.
    ``(b) Terms of Cooperative Agreements and Loans.--
            ``(1) Cooperative agreements.--
                    ``(A) Initial awards.--Each cooperative agreement 
                awarded under this section shall be for an initial 
                period determined by the Secretary, not to exceed 5 
                years, and shall be in an amount determined by the 
                Secretary, not to exceed $5,000,000.
                    ``(B) Subsequent awards.--An entity receiving a 
                cooperative agreement under this section may apply for 
                additional awards with respect to other eligible drugs 
                or eligible devices under this subsection. The 
                Secretary may award additional cooperative agreements 
                to such entities, for periods not to exceed 5 years, in 
                amounts not to exceed $5,000,000.
                    ``(C) Extensions.--The Secretary may extend the 
                initial time period of a cooperative agreement awarded 
                under subparagraph (A) or (B), but the total award 
                amount of the original award plus any extension may not 
                exceed $5,000,000.
            ``(2) Low interest revolving loans.--Each loan awarded 
        under this section shall be for a period determined by the 
        Secretary, with an interest rate not greater than the Federal 
        Reserve benchmark interest rate plus 3 percent, and in an 
        amount not greater than $5,000,000.
    ``(c) Applications.--
            ``(1) In general.--To be eligible to receive a cooperative 
        agreement or loan under this section, an entity shall--
                    ``(A) be an organization that--
                            ``(i) manufactures, or facilitates the 
                        manufacture of, finished drug products or 
                        devices in the United States;
                            ``(ii) is an organization described in 
                        paragraph (3) or (4) of section 501(c) of the 
                        Internal Revenue Code of 1986 and exempt from 
                        tax under section 501(a) of such Code; and
                            ``(iii) is based in the United States;
                    ``(B) demonstrate expertise in the process of drug 
                or device manufacturing, and the ability to fully 
                comply with all applicable State and Federal 
                requirements;
                    ``(C) agree to ensure that--
                            ``(i) the highest total compensation 
                        offered to any employee of such entity is not 
                        more than 40 times greater than the total 
                        compensation offered to the lowest-compensated 
                        employee, including any self-employed 
                        independent contracted workers on an hourly 
                        wage, of such entity;
                            ``(ii) among drugs that may be self-
                        administered by patients and remaining after 
                        application of clause (iii), other than such 
                        drugs that are not required to be distributed 
                        through pharmacies--
                                    ``(I) the entity shall report to 
                                the Secretary on an annual basis any 
                                barriers faced in making the drug 
                                widely available through retail 
                                pharmacies; and
                                    ``(II) the entity shall, on an 
                                annual basis and in a manner prescribed 
                                by the Secretary, make publicly 
                                available complete information on the 
                                availability of the drug from retail 
                                pharmacies; and
                            ``(iii) if the Secretary identifies a need 
                        to supplement the strategic national stockpile 
                        under section 319F-2, the Secretary has 
                        priority access to purchase, at the average 
                        cost price offered to other purchasers, a 
                        quantity of the drug or device equivalent to at 
                        least 25 percent of the entity's production, or 
                        such percentage of such supply as the 
                        Secretary, in consultation with the entity, 
                        determines appropriate, consistent with public 
                        health needs, until the need has been met;
                    ``(D) include a timeline for any drugs or devices 
                manufactured by the entity that are expected to come to 
                market within the duration of the cooperative agreement 
                or loan, with at least one such drug or device expected 
                to come to market within 5 years of starting the 
                cooperative agreement or loan; and
                    ``(E) submit an application at such time, in such 
                manner, and containing such additional information as 
                the Secretary may require.
            ``(2) Priority.--In awarding cooperative agreements and 
        loans under this section, the Secretary shall give priority to 
        applications from entities that are expected to manufacture and 
        take to market eligible drugs or eligible devices at a price 
        that is lower than existing treatments for the same disease or 
        condition that such drug or device is intended to treat, or to 
        entities that are expected to manufacture any eligible drug or 
        eligible device identified as a public health priority by the 
        Secretary.
            ``(3) Calculation of wages.--For purposes of paragraph 
        (1)(C)(i) to calculate employee compensation with respect to 
        part-time employees, the Secretary shall calculate the 
        compensation such employees would receive if they were to work 
        full-time at their existing hourly wages.
            ``(4) Report.--The Secretary shall report to Congress 
        annually regarding barriers reported by entities regarding 
        availability of drugs described in paragraph (1)(C)(ii) (other 
        than such drugs that are not required to be distributed through 
        pharmacies) through retail pharmacies and regulatory or 
        legislative recommendations to improve public access to such 
        drugs.
    ``(d) Definitions.--For purposes of this section--
            ``(1) the term `eligible device' means a device--
                    ``(A)(i) that is approved under section 515 of the 
                Federal Food, Drug, and Cosmetic Act, cleared under 
                section 510(k) of such Act, or authorized under section 
                513(f)(2) of such Act;
                    ``(ii) for which the device manufacturer applying 
                for a cooperative agreement under subsection (a) or a 
                low interest revolving loan under subsection (b) has 
                submitted an application under section 515 of the 
                Federal Food, Drug, and Cosmetic Act, or a notification 
                under section 510(k) or 513(f)(2) of such Act; or
                    ``(iii) that is urgently needed to meet a public 
                health need, as determined by the Secretary, and for 
                which the device manufacturer applying for a 
                cooperative agreement under subsection (a) or a low 
                interest revolving loan under subsection (b) has 
                provided a timeline for submission of an application 
                under section 515 of the Federal Food, Drug, and 
                Cosmetic Act, or a notification under section 510(k) or 
                513(f)(2) of such Act; and
                    ``(B) that the Secretary has deemed essential on 
                the basis of--
                            ``(i) there being 2 or fewer active 
                        manufacturers of the device or a substantially 
                        similar device;
                            ``(ii) the device having been on the device 
                        shortage list under section 506J(g) of the 
                        Federal Food, Drug, and Cosmetic Act at any 
                        time in the past 5 years;
                            ``(iii) similar devices have increased in 
                        cost more than the rate of inflation over the 
                        most recent 5-year period;
                            ``(iv) the device meeting an otherwise 
                        unmet critical public health need; or
                            ``(v) other factors, as determined by the 
                        Secretary; and
            ``(2) the term `eligible drug' means a drug--
                    ``(A)(i) that is approved by the Food and Drug 
                Administration under section 505 of the Federal Food, 
                Drug, and Cosmetic Act or licensed under section 351 of 
                this Act;
                    ``(ii) for which the drug manufacturer applying for 
                a cooperative agreement under subsection (a) or a low 
                interest revolving loan under subsection (b) has 
                submitted an application under subsection (b)(2) or (j) 
                of section 505 of the Federal Food, Drug, and Cosmetic 
                Act or under section 351(k) of this Act; or
                    ``(iii) that is urgently needed to meet a public 
                health need, as determined by the Secretary, and for 
                which the drug manufacturer applying for a cooperative 
                agreement under subsection (a) or a low interest 
                revolving loan under subsection (b) has provided a 
                timeline for submission of an application under 
                subsection (b) or (j) of section 505 of the Federal 
                Food, Drug, and Cosmetic Act or under subsection (a) or 
                (k) of section 351 of this Act; and
                    ``(B) that the Secretary has deemed essential on 
                the basis of--
                            ``(i) there being 2 or fewer active 
                        manufacturers of the drug;
                            ``(ii) the drug having been on the drug 
                        shortage list under section 506E of the Federal 
                        Food, Drug, and Cosmetic Act at any time in the 
                        past 5 years;
                            ``(iii) alternative treatments for the 
                        disease or condition the drug is intended to 
                        treat costing more than $50 per 1-month supply 
                        according to the public list price;
                            ``(iv) the drug meeting an otherwise unmet 
                        critical public health need; or
                            ``(v) other purposes, as determined by the 
                        Secretary.
    ``(e) Use of Funds.--A recipient of an award under this section may 
use funds for start-up, research and development, or expansion costs 
associated with the manufacture of eligible drugs or eligible devices, 
in accordance with the terms of the applicable cooperative agreement or 
loan.
    ``(f) Report.--Not later than 3 years after the date of enactment 
of the Expanding Access to Affordable Prescription Drugs and Medical 
Devices Act and annually thereafter, the Secretary shall submit a 
report to Congress on, with respect to the applicable reporting 
period--
            ``(1) the number of grants and loans awarded under the 
        program;
            ``(2) the drugs and devices that came to market with 
        support from grants or loans under the program;
            ``(3) a cost-savings analysis for all federally-funded 
        health programs, based on savings that were realized due to a 
        drug or device whose manufacturer was supported by a grant 
        under this section; and
            ``(4) a cost-savings analysis for consumer out-of-pocket 
        and insurance premium spending, based on savings that were 
        realized due to a drug or device whose manufacturer was 
        supported by a grant under this section, and any impact on 
        consumer access to the drug or device.
    ``(g) Waiver of User Fees With Respect to Entities Not Receiving an 
Award.--
            ``(1) In general.--With respect to an entity that is an 
        organization described in paragraph (2), the Secretary shall 
        waive the following fees that would otherwise be applicable 
        during the period during which such entity is so exempt and is 
        manufacturing such product:
                    ``(A) Fees under paragraphs (1) and (2) of section 
                736(a) of the Federal Food, Drug, and Cosmetic Act.
                    ``(B) Fees under paragraphs (2) and (3) of section 
                738(a) of the Federal Food, Drug, and Cosmetic Act.
                    ``(C) Fees under paragraphs (3), (4), and (5) of 
                section 744B(a) of the Federal Food, Drug, and Cosmetic 
                Act.
                    ``(D) Fees under paragraphs (1)(A), (1)(B), (2), 
                and (3) of section 744H of the Federal Food, Drug, and 
                Cosmetic Act.
            ``(2) Entity described.--An entity described in this 
        paragraph is an entity that--
                    ``(A) is described in paragraph (3) or (4) of 
                section 501(c) of the Internal Revenue Code of 1986 and 
                exempt from tax under section 501(a) of such Code;
                    ``(B) manufactures an eligible drug or eligible 
                device; and
                    ``(C) is not currently receiving a loan or 
                cooperative agreement under this section.
    ``(h) Funding.--
            ``(1) Authorization of appropriations.--To carry out this 
        section, there are authorized to be appropriated such sums as 
        may be necessary for each of fiscal years 2022 through 2031.
            ``(2) Loan repayments.--In addition to any amounts 
        appropriated under paragraph (1), the Secretary of the Treasury 
        shall transfer to the Secretary of Health and Human Services 
        annually an amount equal to the amount received for the 
        previous year in payments on loans awarded under this section 
        for purposes of carrying out the program under this section 
        with respect to loans.''.
    (b) CBO Report.--Not later than 1 year after the date of enactment 
of this Act, the Director of the Congressional Budget Office shall 
submit budget-neutral or cost-savings policy options to Congress 
showing ways to capture the savings from nonprofit drug and device 
manufacturers supported by the program under section 399V-7 of the 
Public Health Service Act, as added by subsection (a). Such options 
shall direct at least half of such savings to create a mandatory 
funding stream to support grants and low-interest loans similar to 
grants and loans offered under section 399V-7 of the Public Health 
Service Act, as added by subsection (a), and any remaining portion of 
such savings toward ensuring the solvency of the Medicare program under 
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) and 
reducing out-of-pocket and premium costs under such program.
    (c) Priority Review.--
            (1) NDAs.--The Secretary of Health and Human Services may 
        grant priority review, as described in the Manual of Policies 
        and Procedures of the Food and Drug Administration and goals 
        identified in the letters described in section 101(b) of the 
        Prescription Drug User Fee Amendments of 2017, for any 
        application that includes a commitment to a specific price that 
        represents a significant cost reduction compared to similar 
        treatments on the market, if the sponsor is a qualified drug or 
        device manufacturing organization (as defined in section 
        501(s)(4) of the Internal Revenue Code of 1986).
            (2) ANDAs.--Section 505(j)(11)(A) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(j)(11)(A)) is amended--
                    (A) in clause (i), by striking ``; or'' and 
                inserting a semicolon;
                    (B) in clause (ii), by striking the period and 
                inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(iii) for which the sponsor is a qualified drug or device 
        manufacturing organization (as defined in section 501(s)(4) of 
        the Internal Revenue Code of 1986), and commits to a specific 
        price that represents a significant cost reduction compared to 
        similar treatments on the market.''.
            (3) Biosimilar biological products.--The Secretary of 
        Health and Human Services may grant priority review for any 
        application under section 351(k) of the Public Health Service 
        Act (42 U.S.C. 262(k)) that includes a commitment to a specific 
        price that represents a significant cost reduction compared to 
        similar treatments on the market, if the sponsor is a qualified 
        drug or device manufacturing organization (as defined in 
        section 501(s)(4) of the Internal Revenue Code of 1986).
            (4) Breakthrough devices.--Section 515B(b)(2) of the 
        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360e-3(b)(2)) 
        is amended--
                    (A) in subparagraph (C), by striking ``; or'' and 
                inserting a semicolon;
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E); and
                    (C) by inserting after subparagraph (C) the 
                following:
            ``(D) for which the sponsor is a qualified drug or device 
        manufacturing organization (as defined in section 501(s)(4) of 
        the Internal Revenue Code of 1986), and commits to a specific 
        price that represents a significant cost reduction compared to 
        similar treatments on the market; or''.

SEC. 3. ADDITIONAL RULES FOR TAX-EXEMPT STATUS OF CERTAIN DRUG AND 
              MEDICAL DEVICE MANUFACTURERS.

    (a) In General.--Section 501 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(s) Additional Requirements for Certain Drug or Medical Device 
Manufacturers.--
            ``(1) Treatment as charitable organization.--A qualified 
        drug or medical device manufacturing organization shall be 
        treated as an organization organized and operated exclusively 
        for charitable purposes under subsection (c)(3) if--
                    ``(A) such organization meets the requirements 
                under paragraph (4),
                    ``(B) no part of the net earnings of such 
                organization inures to the benefit of any private 
                shareholder or individual,
                    ``(C) no substantial part of the activities of such 
                organization is carrying on propaganda, or otherwise 
                attempting, to influence legislation (except as 
                otherwise provided in subsection (h)), and
                    ``(D) such organization does not participate in, or 
                intervene in (including the publishing or distributing 
                of statements), any political campaign on behalf of (or 
                in opposition to) any candidate for public office.
            ``(2) Treatment as social welfare organization.--A 
        qualified drug or medical device organization shall be treated 
        as an organization organized and operated primarily to promote 
        social welfare under subsection (c)(4) if--
                    ``(A) such organization meets the requirements 
                under paragraph (4), and
                    ``(B) no part of the net earnings of such 
                organization inures to the benefit of any private 
                shareholder or individual.
            ``(3) Qualified drug or medical device manufacturing 
        organization.--For purposes of this section--
                    ``(A) In general.--The term `qualified drug or 
                medical device manufacturing organization' means an 
                organization that is organized and operated exclusively 
                for the production of drugs or devices.
                    ``(B) Special rule.--An organization shall not fail 
                to be treated as a qualified drug or medical device 
                manufacturing organization solely because such 
                organization provides public health education, conducts 
                public health screenings, or conducts other related 
                charitable activities.
            ``(4) Requirements.--The requirements of this paragraph are 
        as follows:
                    ``(A) Organization and operation.--The organization 
                is organized as a nonprofit corporation under State law 
                and is compliant with the laws of the State pertaining 
                to operation as a pharmaceutical or medical device 
                manufacturer.
                    ``(B) Drugs and devices.--Each drug or device 
                manufactured by the organization--
                            ``(i) furthers a public health objective 
                        (as determined by the Secretary, in 
                        consultation with the Secretary of Health and 
                        Human Services), such as addressing barriers 
                        related to availability, shortage, or price, 
                        and
                            ``(ii) meets such other requirements, as 
                        determined by the Secretary, in consultation 
                        with the Secretary of Health and Human 
                        Services.
                    ``(C) List price.--
                            ``(i) In general.--The organization 
                        establishes a public list price for each drug 
                        or device manufactured by the organization in 
                        accordance with clause (ii) and charges no more 
                        than such public list price.
                            ``(ii) Maximum list price.--The amount of 
                        the public list price established under this 
                        clause with respect to any drug or device shall 
                        not be more than 120 percent of the sum of--
                                    ``(I) the production costs for the 
                                drug or device,
                                    ``(II) an amount calculated to 
                                recover up to the previous 5 years of 
                                qualified research expenses (as defined 
                                in section 41) attributable to the drug 
                                or device over a 5-year period,
                                    ``(III) the regulatory costs 
                                associated with developing and 
                                maintaining a marketed drug or device,
                                    ``(IV) the anticipated costs (not 
                                greater than the usual and customary 
                                rates) of storing, warehousing, and 
                                distributing the drug or device, plus
                                    ``(V) interest on loans directly 
                                financing the development or production 
                                of the drug or device.
                    ``(D) Compensation.--
                            ``(i) In general.--The organization meets 
                        the requirements of clauses (ii), (iii), and 
                        (iv).
                            ``(ii) Compensation amount.--
                                    ``(I) In general.--The highest 
                                total remuneration offered to any 
                                employee of the organization or of an 
                                applicable independent contractor of 
                                the organization is not more than 40 
                                times greater than the total 
                                remuneration offered to the lowest-
                                compensated employee of the 
                                organization or of any applicable 
                                independent contractor of the 
                                organization. For purposes of this 
                                clause, the compensation provided to a 
                                part-time hourly employee shall be 
                                determined by applying such employee's 
                                hourly wage to the number of hours of a 
                                full-time employee.
                                    ``(II) Applicable independent 
                                contractor.--The term `applicable 
                                independent contractor' means, with 
                                respect to any organization, any 
                                independent contractor that has less 
                                than 2 employees and the contract for 
                                which specifies an hourly rate.
                            ``(iii) Compensation of other independent 
                        contractors.--In the case of any independent 
                        contractor of the organization that is not an 
                        applicable independent contractor, the 
                        organization--
                                    ``(I) compensates any work done at 
                                a fair market rate, and
                                    ``(II) keeps such financial 
                                information as required by the 
                                Secretary with respect to amounts paid 
                                to such independent contractors.
                            ``(iv) Prohibition on outside 
                        compensation.--The organization does not permit 
                        employees to be compensated from any other 
                        person for work related to the organization.
                    ``(E) Board of directors.--The organization--
                            ``(i) maintains an independent board of 
                        directors, and
                            ``(ii) maintains a clear financial 
                        separation from--
                                    ``(I) entities with which the 
                                organization conducts business, and
                                    ``(II) entities from which the 
                                organization purchases goods or 
                                services.
            ``(5) Other definitions.--For purposes of this subsection--
                    ``(A) Drug.--The term `drug' means any drug that is 
                approved under section 505 of the Federal Food, Drug, 
                and Cosmetic Act (21 U.S.C. 355) or licensed under 
                section 351 of the Public Health Service Act (42 U.S.C. 
                262).
                    ``(B) Device.--The term `device' means any device 
                that is approved under section 515 of the Federal Food, 
                Drug, and Cosmetic Act (21 U.S.C. 360e), cleared under 
                section 510(k) of such Act (21 U.S.C. 360(k)), or 
                authorized under section 513(f)(2) of such Act (21 
                U.S.C. 360c(f)(2)).
            ``(6) Regulations.--The Secretary shall issue such 
        regulations and guidance as may be necessary to carry out the 
        provisions of this subsection, including guidance relating to 
        determining acceptable methods for making the calculation under 
        paragraph (4)(C)(ii).''.
    (b) Treatment as a Public Charity.--Section 509(a) of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
paragraph (3), by striking the period at the end of paragraph (4) and 
inserting ``, and'', and by inserting after paragraph (4) the following 
new paragraph:
            ``(5) an organization which meets the requirements of 
        subparagraphs (A), (B), (C), and (D) of section 501(s)(1).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
    (d) Sense of the Senate.--It is the sense of the Senate that 
nothing in the amendments made by this section shall be construed to 
prevent an organization that manufactures drugs or medical devices and 
that is otherwise described in paragraph (3) or (4) of section 501(c) 
of the Internal Revenue Code of 1986 from being treated as an 
organization that is so described.
                                 <all>