,,ii #aacth ,,congress #ast ,session ,s4 #fbg ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #bj1 #bjac ,mr4 ,sanders introduced the following bill2 which was read twice and referred to the ,committee on ,health1 ,education1 ,labor1 and ,pensions ,a ,,bill ,to provide incentives for investment in research and development for new medicines1 to enhance access to new medicines1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,medical ,innovation ,prize ,fund ,act4 #b4 ,findings ,congress makes the following findings3 7#a7 ,the development of new medicines and vaccines is necessary to improve health care outcomes4 7#b7 ,market exclusivity for new products is an expensive1 inefficient1 and unfair mechanism to reward investments in new products4 7#c7 ,by de-linking research and development incentives from product prices1 and by eliminating legal monopolies to sell products1 it is possible to induce investments that are medically more important1 procure products at low prices from competitive suppliers1 radically lower pricing barriers for access to new medicines1 reduce wasteful marketing and research and development activities1 and dramatically lower the overall costs of acquiring innovation1 while expanding access to that innovation4 7#d7 ,by funding innovation prizes at 4#ee percent of gross domestic product1 the ,united ,states would provide more than #hf1jjj1jjj1jjj in rewards for successful innovation in #bjab4 7#e7 ,the development of new medicines benefits from greater sharing of knowledge1 data1 materials1 and technologies4 #c4 ,purpose ,it is the purpose of this ,act to provide incentives to encourage entities to invest in research and development of new medicines and to share knowledge1 data1 materials1 and technology1 through the establishment of a ,medical ,innovation ,prize ,fund1 while enhancing access to such medicines by eliminating legal monopolies on the manufacture1 distribution1 and sale of such medicines4 #d4 ,definitions ,in this ,act3 7#a7 ,biological product ,the term biological product has the meaning given such term in section #cea of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb74 7#b7 ,board ,the term ,board means the ,board of ,trustees for the ,fund for ,medical ,innovation ,prizes established under section #g4 7#c7 ,drug ,the term drug has the meaning given such term in section #bja of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cba74 7#d7 ,fund ,the term ,fund means the ,fund for ,medical ,innovation ,prizes established under section #f4 7#e7 ,market clearance ,the term market clearance means the approval of an application under section #eje of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee7 or the approval of a biologics license application under subsection 7a7 of section #cea of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb74 #e4 ,elimination of exclusive rights to market drugs and biological products 7a7 ,in general ,notwithstanding title #ce1 ,united ,states ,code1 relevant provisions of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cja et seq47 7including amendments made by the ,drug ,price ,competition and ,patent ,term ,restoration ,act of #aihd 7,public ,law #ih-dag2 commonly referred to as the ,hatch-,waxman ,act771 the ,medicare ,prescription ,drug1 ,improvement1 and ,modernization ,act of #bjjc 7,public ,law #ajh-agc71 and any other provision of law providing any patent right or exclusive marketing period for any drug1 biological product1 or manufacturing process for a drug or biological product 7such as pediatric extensions under section #eje;,a of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee;a7 or orphan drug marketing exclusivity under subchapter ,b of chapter ,v of such ,act 7#ba ,u4,s4,c4 #cfj;aa et seq4771 no person shall have the right to exclusively manufacture1 distribute1 sell1 or use a drug1 a biological product1 or a manufacturing process for a drug or biological product in interstate commerce1 including the exclusive right to rely on health registration data or the #cj-month stay-of-effectiveness period for ,orange ,book patents under section #eje7;j7 of such ,act 7#ba ,u4,s4,c4 #cee7;j774 7b7 ,remuneration ,a person that is eligible for prize payments from the ,fund as provided for in sections #i1 #aj1 or #aa shall receive such payments-- 7#a7 in lieu of any remuneration the person would have otherwise received for the exclusive marketing1 distribution1 sale1 or use of a drug1 biological product1 or manufacturing process for a drug or biological product but for the application of subsection 7a72 and 7#b7 in addition to any other remuneration that such person receives by reason of the nonexclusive marketing1 distribution1 sale1 or use of the drug1 biological product1 or manufacturing process for a drug or biological product4 7c7 ,application ,this section shall apply only with respect to the marketing1 distribution1 sale1 or use of a drug1 a biological product1 or a manufacturing process for a drug or biological product that occurs on or after ,october #a1 #bjad4 #f4 ,fund for medical innovation prizes 7a7 ,establishment ,there is hereby established in the ,treasury of the ,united ,states a revolving fund to be known as the ,fund for ,medical ,innovation ,prizes1 which shall consist of amounts appropriated to the ,fund and amounts credited to the ,fund under subsection 7c74 7b7 ,availability of funds ,amounts in the ,fund shall be available to the ,board1 subject to section #ag7;c71 for the purpose of carrying out this ,act4 7c7 ,amounts credited to the ,fund ,the ,secretary of the ,treasury shall credit to the ,fund the interest on1 and the proceeds from sale or redemption of1 obligations held in the ,fund4 #g4 ,board of trustees for the ,fund 7a7 ,establishment ,there is hereby established 7as a permanent1 independent establishment in the executive branch7 a ,board of ,trustees for the ,fund for ,medical ,innovation ,prizes4 7b7 ,membership ,the ,board shall be composed of #ac members1 including-- 7#a7 the ,administrator of the ,centers for ,medicare ,medicaid ,services2 7#b7 the ,commissioner of ,food and ,drugs2 7#c7 the ,director of the ,national ,institutes of ,health2 7#d7 the ,director of the ,centers for ,disease ,control and ,prevention2 and 7#e7 #i individuals to be appointed by the ,president1 with the advice and consent of the ,senate1 of which-- 7,a7 #b shall be representatives of businesses that provide health insurance to employees2 7,b7 #b shall be representatives of entities that provide health insurance and contribute to the co-funding of the ,fund for ,medical ,innovation ,prizes under section #ag2 7,c7 #b shall be representatives of the medical research and development sector1 including at least #a representative of the nonprofit private medical research and development sector2 and 7,d7 #c shall be representatives of consumer and patient interests1 including at least one representative of patients suffering from orphan diseases4 7c7 ,terms 7#a7 ,in general ,except as provided in paragraph 7#b71 each member appointed to the ,board under subsection 7b77#e7 shall be appointed for a term of #d years4 7#b7 ,terms of initial appointees ,as designated by the ,president at the time of appointment1 of the members first appointed to the ,board under subsection 7b77#e7-- 7,a7 #e members shall be appointed for a term of #d years2 and 7,b7 #d members shall be appointed for a term of #b years4 7d7 ,vacancies ,any member of the ,board appointed to fill a vacancy occurring before the expiration of the term for which the member's predecessor was appointed shall be appointed only for the remainder of that term4 ,a member of the ,board may serve after the expiration of that member's term until a successor has taken office4 7e7 ,compensation and travel expenses 7#a7 ,compensation ,members of the ,board shall each be paid not less than the daily equivalent of level ,,iv of the ,executive ,schedule for each day 7including travel time7 during which they are engaged in the actual performance of the duties of the ,board4 7#b7 ,travel expenses ,each member of the ,board shall receive travel expenses1 including per diem in lieu of subsistence1 in accordance with applicable provisions under subchapter ,i of chapter #eg of title #e1 ,united ,states ,code4 7f7 ,chairperson2 ,officers ,the members of the ,board shall elect a ,chairperson and any other officers of the ,board4 ,the ,chairperson and any such officers shall be elected for a term of #b years4 7g7 ,staff ,the ,board may appoint and fix the pay of such additional personnel as the ,board considers appropriate4 ,the staff of the ,board shall be appointed subject to the provisions of title #e1 ,united ,states ,code1 governing appointments in the competitive service1 and shall be paid in accordance with the provisions of chapter #ea and subchapter ,,iii of chapter #ec of such title relating to classification and ,general ,schedule pay rates4 7h7 ,experts and consultants ,the ,board may procure temporary and intermittent services under section #caji7;b7 of title #e1 ,united ,states ,code4 #h4 ,powers and duties of the ,board 7a7 ,duties ,the ,board shall-- 7#a7 award prize payments for medical innovation in accordance with this ,act2 and 7#b7 submit a report to the ,congress under section #af4 7b7 ,powers of ,board 7#a7 ,hearings and sessions 7,a7 ,in general ,the ,board may1 for the purpose of carrying out this ,act1 hold hearings1 sit and act at times and places1 take testimony1 and receive evidence as the ,board considers appropriate4 7,b7 ,first meeting ,not later than #cj days after the initial members of the ,board are appointed under section #g7;b77#e7 and confirmed1 the ,board shall conduct its first meeting4 7#b7 ,policies and procedures 7,a7 ,in general ,not later than #a year after the initial members of the ,board are appointed under section #g7;b77#e7 and confirmed1 the ,board shall establish such policies and procedures as may be appropriate to carry out this ,act4 7,b7 ,majority vote ,the policies and procedures of the ,board shall require that any determination of the ,board be made by not less than a majority vote of the members of the ,board4 7,c7 ,administrative procedures ,the policies and procedures of the ,board shall comply with subchapter ,,ii of chapter #e of title #e1 ,united ,states ,code4 7,d7 ,transparency ,the policies and procedures of the ,board shall-- 7i7 comply with sections #eeb and #eeb;b of title #e1 ,united ,states ,code 7commonly referred to as the ,freedom of ,information ,act and the ,government in the ,sunshine ,act1 respectively72 and 7ii7 ensure that the proceedings and deliberations of the ,board are transparent and are supported by a description of the methods1 data sources1 assumptions1 outcomes1 and related information that will allow the public to understand how the ,board reaches its criteria-setting and award decisions4 7#c7 ,expert advisory committees ,to assist the ,board in carrying out this ,act1 the ,board shall establish independent expert advisory committees1 including committees on the following3 7,a7 ,economic evaluation of therapeutic benefits4 7,b7 ,business models and incentive structures for innovation4 7,c7 ,research and development priorities4 7,d7 ,orphan diseases4 7,e7 ,financial control and auditing4 7,f7 ,open source biomedical science4 7#d7 ,powers of members and agents ,any member or agent of the ,board may1 if authorized by the ,board1 take any action which the ,board is authorized to take under this ,act4 7#e7 ,mails ,the ,board may use the ,united ,states mails in the same manner and under the same conditions as other departments and agencies of the ,united ,states4 #i4 ,prize payments for medical innovation 7a7 ,award ,for fiscal year #bjae1 and each subsequent fiscal year1 the ,board shall award to persons described in subsection 7b7 prize payments for medical innovation relating to a drug1 a biological product1 or a new manufacturing process for a drug or biological product4 7b7 ,eligibility ,to be eligible to receive a prize payment under subsection 7a7 for medical innovation relating to a drug1 a biological product1 or a manufacturing process1 a person shall be-- 7#a7 in the case of a drug or biological product1 the first person to receive market clearance with respect to the drug or biological product2 7#b7 in the case of a manufacturing process1 the holder of the patent with respect to such process2 or 7#c7 in the case of open source contributions1 the persons or communities that openly shared knowledge1 data1 materials1 and technology on a royalty-free and nondiscriminatory basis4 7c7 ,criteria ,the ,board shall1 by regulation1 establish criteria for the selection of recipients1 and for determining the amount1 of prize payments under this section4 ,such criteria shall include consideration of the following3 7#a7 ,the number of patients who would benefit from the drug1 biological product1 or manufacturing process involved1 including 7in cases of global neglected diseases1 global infectious diseases1 and other global public health priorities7 the number of non-,united ,states patients4 7#b7 ,the incremental therapeutic benefit of the drug1 biological product1 or manufacturing process involved as compared to existing drugs1 biological products1 and manufacturing processes available to treat the same disease or condition1 except that the ,board shall provide for cases where drugs1 biological products1 or manufacturing processes are developed at roughly the same time1 so that the comparison is to products that were not recently developed4 7#c7 ,the degree to which the drug1 biological product1 or manufacturing process involved addresses priority health care needs1 including-- 7,a7 current and emerging global infectious diseases2 7,b7 severe illnesses with small client populations 7such as indications for which orphan designation has been granted under section #ebf of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cfj;bb772 and 7,c7 neglected diseases that primarily afflict the poor in developing countries4 7#d7 ,improved efficiency of manufacturing processes for drugs or biological processes4 7#e7 ,the extent to which knowledge1 data1 materials and technology that are openly shared have contributed to the successful development of new products or improved processes for manufacturing products4 7#f7 ,in the case of antibiotics or other products for which drug resistance is a significant public health problem1 the expected life cycle benefits of the antibiotic or other product1 with appropriate adjustments that reward the conservation of the resources1 taking into account drug resistance that is related to use of the product4 7#g7 ,in the case of products used in stockpiles for potential threats to the public health1 the risk adjusted benefits of stockpiling the products4 7d7 ,requirements ,in awarding prize payments under this section1 the ,board shall comply with the following3 7#a7 ,in cases where a new drug1 biological product1 or manufacturing process offers an improvement over an existing drug1 biological product1 or manufacturing process and the new drug1 biological product1 or manufacturing process competes with or replaces the existing drug1 biological product1 or manufacturing process1 the ,board shall continue to make prize payments for the existing drug1 biological product1 or manufacturing process to the degree that the new drug1 biological product1 or manufacturing process was based on or benefitted from the development of the existing drug1 biological product1 or manufacturing process4 7#b7 ,the ,board may not make prize payments based on the identity of the person who manufactures1 distributes1 sells1 or uses the drug1 biological product1 or manufacturing process involved4 7#c7 ,the ,board may award prize payments for a drug1 a biological product1 or a manufacturing process for not more than #aj fiscal years1 regardless of the term of any related patents4 7#d7 ,for any fiscal year1 the ,board may not award a prize payment for any single drug1 biological product1 or manufacturing process in an amount that exceeds #e percent of the total amount appropriated to the ,fund for that year4 7#e7 ,for every drug or biological product that receives market clearance1 the ,board shall determine whether and in what amount to award a prize payment for the drug or biological product not later than the end of the fourth full calendar-year quarter following the calendar-year quarter in which the drug or biological product receives market clearance4 #aj4 ,prizes for priority research and development 7a7 ,minimum levels of funding ,for fiscal year #bjae1 and each subsequent fiscal year1 the ,board shall establish and may periodically modify minimum levels of funding under section #i for priority research and development4 7b7 ,initial minimum levels ,of the amount appropriated to the ,fund for a fiscal year1 the ,board shall use 7subject to the establishment or modification of an applicable minimum level of funding under subsection 7a77 not less than-- 7#a7 #d percent of such amount for global neglected diseases2 7#b7 #aj percent of such amount for orphan diseases2 and 7#c7 #d percent of such amount for global infectious diseases and other global public health priorities1 including research on ,,aids1 ,,aids vaccines1 and medicines for responding to bioterrorism4 7c7 ,public input2 recommendations ,the advisory committee on research and development priorities 7established pursuant to section #h7;b77#c77 shall-- 7#a7 solicit public input on research and development priorities2 and 7#b7 periodically recommend to the ,board modifications in the minimum levels of funding for prizes for priority research and development under this section4 7d7 ,procedures ,the ,board shall adopt procedures to establish and periodically modify minimum levels of funding under section #i for priority research and development4 #aa4 ,open source dividend prizes 7a7 ,in general ,in order to induce greater access and the open sharing of knowledge1 data1 materials and technology1 at least #e percent of the prize payments from the ,fund shall be dedicated to ,open ,source ,dividend prizes4 7b7 ,procedures 7#a7 ,in general ,the ,board of ,trustees shall adopt procedures for the allocation of ,open ,source ,dividend prizes4 ,such procedures shall-- 7,a7 be fully transparent regarding the process for evaluating the value of open sharing of knowledge1 data1 materials1 and technology2 7,b7 reward the open1 nondiscriminatory and royalty-free sharing of knowledge1 data1 materials1 and technology that has contributed to the development of the new drugs1 biological products1 or manufacturing processes that are rewarded under sections #i and #aj2 7,c7 in the case of rewards for contributing to the development of new drugs1 biological products1 or manufacturing processes rewarded under sections #i and #aj1 provide for a time-limited period of nominations for persons or communities whose contributions were considered useful1 including the evidence to support such nominations to describe the significance of the contribution2 and 7,d7 provide for rules and procedures to protect against conflicts of interest4 7#b7 ,public availability of nominations ,the nominations described in paragraph 7#a77;,c71 and the evidence supporting such nominations1 shall be public4 ,the public shall be allowed to provide commentary and additional evidence on such nominations before awards are made4 #ab4 ,competitive intermediaries for funding interim technologies 7a7 ,in general ,the ,board of ,trustees may authorize multiple nonprofit intermediaries to reward projects for interim research and development of products1 or for open source dividend prizes4 ,such intermediaries shall compete for funding from non-,federal entities that co-fund the ,fund4 7b7 ,availability ,prizes awarded by competitive intermediaries shall be available to persons or communities that provide open1 nondiscriminatory and royalty-free licenses to relevant intellectual property rights4 7c7 ,rules ,the ,board of ,trustees shall adopt rules to ensure the transparency and accountability of any entities authorized to act as competitive intermediaries under subsection 7a74 #ac4 ,special transition rules 7a7 ,in general ,a drug or biological product that is on the market on ,october #a1 #bjad1 shall remain eligible for prize payments for not more than #aj fiscal years1 consistent with section #i7;d77#c74 7b7 ,determination of value ,in determining the amount of a prize payment for a drug or biological product described in subsection 7a71 the ,board shall calculate the incremental value of the drug or biological product as of the date on which the drug or biological product was first introduced in the market4 7c7 ,maximum amount ,with respect to drugs and biological products described in subsection 7a71 the ,board may award-- 7#a7 of the amount appropriated to the ,fund for fiscal year #bjae1 not more than #ij percent of such amount2 and 7#b7 of the amount appropriated to the ,fund for each of the succeeding #i fiscal years1 not more than a percentage of such amount that is equal to #i percent less the percentage applicable to the preceding fiscal year under this subsection4 #ad4 ,arbitration ,in the case of a drug that is on the market on ,october #a1 #bjad1 and subject to patents owned by a party other than the person who first received market clearance for the drug1 the ,board shall establish an arbitration procedure to determine an equitable division of any prize payments under this ,act among the patent owners and the person who first received market clearance for the drug4 #ae4 ,annual audits by ,,gao 7a7 ,audits ,the ,comptroller ,general of the ,united ,states shall conduct an audit of the ,board each fiscal year to determine the effectiveness of the ,board-- 7#a7 in bringing to market drugs1 vaccines and other biological products1 and new manufacturing processes for medicines in a cost-effective manner2 and 7#b7 in addressing society's medical needs1 including global neglected diseases that afflict primarily the poor in developing countries1 indications for which orphan designation has been granted under section #ebf of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cfj;bb71 and global infectious diseases and other global public health priorities4 7b7 ,reports ,the ,comptroller ,general of the ,united ,states shall submit a report to the ,congress each fiscal year on the results of each audit conducted under subsection 7a74 #af4 ,report to ,congress ,not later than #a year after the date of the enactment of this ,act1 the ,board shall submit to ,congress a report containing the findings1 conclusions1 and recommendations of the ,board concerning the implementation and administration of this ,act1 including recommendations for such legislative and administrative action as the ,board determines to be appropriate4 #ag4 ,funding 7a7 ,appropriations 7#a7 ,start-up costs ,for fiscal year #bjae1 there are authorized to be appropriated to the ,fund1 such sums as may be necessary to carry out this ,act4 7#b7 ,program implementation ,for fiscal year #bjae and each subsequent fiscal year1 there is appropriated to the ,fund1 out of any funds in the ,treasury not otherwise appropriated1 an amount equal to the amount that is 4#ee percent of the gross domestic product of the ,united ,states for the preceding fiscal year 7as such amount is determined by the ,secretary of ,commerce74 7b7 ,availability ,funds appropriated to the ,fund for a fiscal year shall remain available for expenditure in accordance with this ,act until the end of the #c-year period beginning on ,october #a of such fiscal year4 ,any such funds that are unexpended at the end of such period shall revert to the ,treasury4 #ah4 ,imposition of annual fee on health insurance providers 7a7 ,imposition of fee 7#a7 ,in general ,each covered entity engaged in the business of providing health insurance shall pay to the ,secretary not later than the annual payment date of each calendar year beginning after #bjad a fee in an amount determined under subsection 7b74 7#b7 ,annual payment date ,for purposes of this section1 the term annual payment date means1 with respect to any calendar year1 a date determined by the ,secretary1 which in no event1 may be later than ,september #cj of such calendar year4 7b7 ,determination of fee amount ,with respect to each covered entity1 the fee under this section for any calendar year shall be equal to the amount determined under section #ag7;a77#b71 multiplied by the ratio of the covered entity's net premiums written with respect to health insurance for any ,united ,states health risk taken into account under subsection 7c7 during the preceding calendar year1 to-- 7#a7 the sum of net premiums for all covered entities2 and 7#b7 all ,federal outlays on health insurance or reimbursement of health care costs1 excluding the costs of long term care4 7c7 ,amounts taken into account ,for purposes of paragraph 7b71 the net premiums written with respect to health insurance for any ,united ,states health risk that are taken into account during any calendar year with respect to any covered entity shall be determined as follows3 7#a7 ,with respect to a covered entity's net premiums written during the calendar year that are not more than #be1jjj1jjj1 the percentage of net premiums written that are taken into account is #j percent4 7#b7 ,with respect to a covered entity's net premiums written during the calendar year that are more than #be1jjj1jjj but less than #ej1jjj1jjj1 the percentage of net premiums written that are taken into account is #ej percent4 7#c7 ,with respect to a covered entity's net premiums written during the calendar year that are #ej1jjj1jjj or more1 the percentage of net premiums written that are taken into account is #ajj percent4 7d7 ,covered entity 7#a7 ,in general ,for purposes of this section1 the term covered entity means any entity which provides health insurance for any ,united ,states health risk4 7#b7 ,exclusion ,such term does not include any governmental entity4