Medical Innovation Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 5031 To authorize the collection of supplemental payments to increase congressional investments in medical research, and for other purposes. IN THE HOUSE OF REPRESENTATIVES NOVEMBER 8, 2019 Mr. WELCH introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To authorize the collection of supplemental payments to in- crease congressional investments in medical research, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Medical Innovation Act 4 of 2019’’. 5 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 5031 IH SEC. 2. AUTHORITY TO ASSESS AND USE SUPPLEMENTAL 1 PAYMENTS TO INCREASE CONGRESSIONAL 2 INVESTMENTS IN MEDICAL RESEARCH. 3 (a) IN GENERAL.—Section 301 of the Public Health 4 Service Act (42 U.S.C. 241) is amended by adding at the 5 end the following: 6 ‘‘(i) AUTHORITY TO ASSESS AND USE SUPPLE- 7 MENTAL PAYMENTS TO INCREASE CONGRESSIONAL IN- 8 VESTMENTS IN MEDICAL RESEARCH.— 9 ‘‘(1) DEFINITIONS.—For purposes of this sub- 10 section: 11 ‘‘(A) COVERED BLOCKBUSTER DRUG.— 12 ‘‘(i) IN GENERAL.—The term ‘covered 13 blockbuster drug’ means any product— 14 ‘‘(I) for which the covered manu- 15 facturer reported to the Securities and 16 Exchange Commission on a form, in- 17 cluding form 10–K or form 20–F, or 18 is otherwise determined by the Sec- 19 retary to have received, at least 20 $1,000,000,000 in net sales in the 21 previous calendar year; and 22 ‘‘(II) that was developed, in 23 whole or in part, through Federal 24 Government investments in medical 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 5031 IH research, as the Secretary determines 1 in accordance with clause (ii). 2 ‘‘(ii) DETERMINATION OF FEDERAL 3 GOVERNMENT INVESTMENT.—In deter- 4 mining under clause (i)(II) whether a 5 product was developed, in whole or in part, 6 through Federal Government investments 7 in medical research, the Secretary shall 8 consider whether information included in 9 any patent that claims the covered block- 10 buster drug or that claims a method of 11 using such covered blockbuster drug and 12 with respect to which a claim of patent in- 13 fringement could reasonably be asserted if 14 a person not licensed by the owner engaged 15 in the manufacture, use, or sale of the cov- 16 ered blockbuster drug, or any element of 17 the covered blockbuster drug— 18 ‘‘(I) relates to, or is based upon, 19 prior science conducted, in whole or in 20 part, by a person that is or was fund- 21 ed by the Federal Government; 22 ‘‘(II) relates to, acts upon, or is 23 based upon knowledge of a signaling 24 pathway, cellular receptor, ion chan- 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 5031 IH nel, protein, DNA or RNA sequence 1 or mutation, virus, or any other sci- 2 entific information discovered, in 3 whole or in part, through research 4 funded by the Federal Government; or 5 ‘‘(III) relates to, or is based 6 upon, through the manufacturing 7 process or testing process of the cov- 8 ered blockbuster drug, technology de- 9 rived, in whole or in part, through re- 10 search funded by the Federal Govern- 11 ment. 12 ‘‘(B) COVERED MANUFACTURER.—The 13 term ‘covered manufacturer’ means a person— 14 ‘‘(i) that holds an application ap- 15 proved under section 505 of the Federal 16 Food, Drug, and Cosmetic Act or a license 17 under section 351 of this Act for a covered 18 blockbuster drug; or 19 ‘‘(ii) who is a co-licensed partner of 20 the person described in clause (i) that ob- 21 tains the covered blockbuster drug directly 22 from a person described in this clause or 23 clause (i). 24 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 5031 IH ‘‘(C) COVERED SETTLEMENT AGREE- 1 MENT.— 2 ‘‘(i) IN GENERAL.—The term ‘covered 3 settlement agreement’ means a settlement 4 agreement (including a consent decree), 5 and except as provided under clause (ii)— 6 ‘‘(I) that is between an agency 7 and a covered manufacturer; 8 ‘‘(II) that relates to— 9 ‘‘(aa) an alleged violation of, 10 or a penalty under, section 11 1128A of the Social Security Act 12 or section 1128B of the Social 13 Security Act; 14 ‘‘(bb) an alleged violation 15 under subchapter III of chapter 16 37 of title 31, United States 17 Code (commonly known as the 18 ‘False Claims Act’); 19 ‘‘(cc) an alleged violation 20 under the Federal Food, Drug, 21 and Cosmetic Act; or 22 ‘‘(dd) an alleged violation of 23 any other Federal civil or crimi- 24 nal law; and 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 5031 IH ‘‘(III) under the terms of which a 1 covered manufacturer is obligated in 2 an amount not less than a total of 3 $1,000,000, including civil or criminal 4 penalties with respect to any parties, 5 including governmental and private 6 entities. 7 ‘‘(ii) EXCEPTION FOR SETTLEMENTS 8 NOT AFFECTING TAXPAYERS OR PUBLIC 9 HEALTH.—The term ‘covered settlement 10 agreement’ does not include any settlement 11 agreement that the Secretary determines— 12 ‘‘(I) does not involve an alleged 13 criminal violation; and 14 ‘‘(II) does not to relate to— 15 ‘‘(aa) allegations of fraud re- 16 sulting, or potentially resulting, 17 in a loss of taxpayer dollars; or 18 ‘‘(bb) allegations of conduct 19 having an adverse impact, or a 20 potentially adverse impact, on the 21 health of the public. 22 ‘‘(D) PERSON.—The term ‘person’ has the 23 meaning given such term in section 201(e) of 24 the Federal Food, Drug, and Cosmetic Act. 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 5031 IH ‘‘(E) PRODUCT.—The term ‘product’ 1 means a drug approved under section 505 of 2 the Federal Food, Drug, and Cosmetic Act or 3 licensed under section 351, and subject to sec- 4 tion 503(b)(1) of the Federal Food, Drug, and 5 Cosmetic Act. 6 ‘‘(2) SUPPLEMENTAL PAYMENTS TO INCREASE 7 CONGRESSIONAL INVESTMENTS IN MEDICAL RE- 8 SEARCH.— 9 ‘‘(A) SUPPLEMENTAL PAYMENT ASSESS- 10 MENT AND COLLECTION.—Beginning with the 11 first fiscal year that begins at least 60 days 12 after the date of enactment of the Medical In- 13 novation Act of 2019, and each subsequent fis- 14 cal year, the Secretary shall, in accordance with 15 this paragraph, assess and collect supplemental 16 payments to increase congressional investments 17 in medical research from each covered manufac- 18 turer described in subparagraph (B). 19 ‘‘(B) CRITERIA FOR ASSESSING PAY- 20 MENTS.—A covered manufacturer that meets 21 both of the following criteria for a calendar year 22 (referred to in this subparagraph and subpara- 23 graph (D) as the ‘applicable calendar year’) 24 shall be assessed a supplemental payment under 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 5031 IH subparagraph (A) for the fiscal year beginning 1 in the proceeding calendar year: 2 ‘‘(i) A covered manufacturer that, 3 during the 5-year period immediately pre- 4 ceding the date on which the payment is 5 assessed, but not before the date of enact- 6 ment of the Medical Innovation Act of 7 2019, entered into a covered settlement 8 agreement. 9 ‘‘(ii) A covered manufacturer that re- 10 ported net income of at least 11 $1,000,000,000 to the Securities and Ex- 12 change Commission on a form, including 13 form 10–K or form 20–F, or that the Sec- 14 retary otherwise determines to have had 15 net income of at least $1,000,000,000— 16 ‘‘(I) during the applicable cal- 17 endar year; or 18 ‘‘(II) during the calendar year in 19 which the covered manufacturer en- 20 tered into a covered settlement agree- 21 ment, as described in clause (i). 22 ‘‘(C) PAYMENT AMOUNT.— 23 ‘‘(i) IN GENERAL.—A covered manu- 24 facturer described in subparagraph (B) 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 5031 IH shall be assessed a supplemental payment 1 to increase congressional investments in 2 medical research for a fiscal year equal to 3 the applicable percentage of the net income 4 of the covered manufacturer, as reported 5 or determined as described in subpara- 6 graph (B)(ii), for the previous calendar 7 year, multiplied by the number of covered 8 blockbuster drugs of the covered manufac- 9 turer for that year. 10 ‘‘(ii) APPLICABLE PERCENTAGE.—For 11 purposes of determining the amount of a 12 supplemental payment under clause (i), the 13 applicable percentage of the net income of 14 a covered manufacturer is— 15 ‘‘(I) 0.75 percent, in the case of 16 a covered settlement agreement under 17 the terms of which the total obligation 18 of a covered manufacturer is in an 19 amount that is less than 20 $500,000,000; 21 ‘‘(II) 1 percent, in the case of a 22 covered settlement agreement under 23 the terms of which the total obligation 24 of a covered manufacturer is in an 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 5031 IH amount that is at least $500,000,000 1 but less than $1,000,000,000; or 2 ‘‘(III) 1.5 percent, in the case of 3 a covered settlement agreement under 4 the terms of which the total obligation 5 of a covered manufacturer is in an 6 amount that is at least 7 $1,000,000,000. 8 ‘‘(D) ANNUAL LIMITATION.—In the case of 9 a covered manufacturer that entered into more 10 than 1 covered settlement agreement during an 11 applicable calendar year, such covered manufac- 12 turer shall be assessed a supplemental payment 13 under subparagraph (C) only with respect to 14 the covered settlement agreement under which 15 the total amount obligated of the covered manu- 16 facturer, as described in paragraph 17 (1)(C)(i)(III), is the highest. 18 ‘‘(E) PUBLICATION OF PAYMENTS.—Be- 19 ginning with the first fiscal year that begins at 20 least 60 days after the date of enactment of the 21 Medical Innovation Act of 2019, and not later 22 than 60 days before the start of each fiscal 23 year, the Secretary shall publish in the Federal 24 Register, with respect to the next fiscal year— 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 5031 IH ‘‘(i) a list of covered manufacturers 1 subject to the payment under this para- 2 graph; 3 ‘‘(ii) a list of the covered blockbuster 4 drugs of each such covered manufacturer; 5 ‘‘(iii) the total payment amount as- 6 sessed to each such covered manufacturer; 7 and 8 ‘‘(iv) the manner in which payments 9 assessed under this paragraph will be col- 10 lected. 11 ‘‘(F) CREDITING AND AVAILABILITY OF 12 SUPPLEMENTAL PAYMENTS.— 13 ‘‘(i) IN GENERAL.—Subject to clause 14 (ii), payments authorized under this para- 15 graph shall be collected and available for 16 obligation only to the extent and in the 17 amount provided in advance in appropria- 18 tions Acts. Such payments are authorized 19 to remain available until expended. 20 ‘‘(ii) COLLECTIONS AND APPROPRIA- 21 TIONS ACTS.— 22 ‘‘(I) IN GENERAL.—The pay- 23 ments authorized by this paragraph— 24 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 5031 IH ‘‘(aa) subject to subclause 1 (II), shall be collected and avail- 2 able in each fiscal year in an 3 amount not to exceed the amount 4 specified in appropriation Acts, 5 or otherwise made available for 6 obligation, for such fiscal year; 7 and 8 ‘‘(bb) shall be available to 9 the Secretary to distribute, as de- 10 scribed in paragraph (3). 11 ‘‘(II) PROVISION FOR EARLY 12 PAYMENTS.—Payments authorized 13 under clause (iii) for a fiscal year, 14 prior to the due date for such pay- 15 ments, may be accepted by the Sec- 16 retary. 17 ‘‘(iii) AUTHORIZATION OF APPROPRIA- 18 TIONS.—For the first fiscal year that be- 19 gins at least 60 days after the date of en- 20 actment of the Medical Innovation Act of 21 2019 and for each subsequent fiscal year, 22 there is authorized to be appropriated for 23 the purpose of making distributions under 24 paragraph (3) to meet the priorities de- 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR 5031 IH scribed in paragraph (4), an amount equal 1 to the total amount of supplemental pay- 2 ments assessed for such fiscal year under 3 this paragraph. 4 ‘‘(G) REMITTING PAYMENTS.—A covered 5 manufacturer assessed a supplemental payment 6 under subparagraph (A) shall remit the pay- 7 ment no later than the first business day on or 8 after October 1 of each fiscal year, or the first 9 business day after the date of enactment of an 10 appropriations Act providing for the collection 11 and obligation of supplemental payments for 12 such fiscal year. 13 ‘‘(H) COLLECTION OF ASSESSED PAY- 14 MENTS THAT ARE NOT REMITTED.—In any case 15 where the Secretary does not receive a supple- 16 mental payment assessed under subparagraph 17 (A) within 30 days after it is due, such supple- 18 mental payment shall be treated as a claim of 19 the United States Government subject to sub- 20 chapter II of chapter 37 of title 31, United 21 States Code. 22 ‘‘(I) SUPPLEMENT NOT SUPPLANT.—Pay- 23 ments collected under this paragraph shall be 24 used to supplement and not supplant other 25 VerDate Sep 11 2014 01:55 Nov 20, 2019 Jkt 099200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H5031.IH H5031 pamtmann on DSKBC07HB2PROD with BILLS 14 •HR 5031 IH Federal funds made available to carry out the 1 priorities described in paragraph (4). 2 ‘‘(3) DISTRIBUTION OF PAYMENTS TO AGEN- 3 CIES TO INCREASE CONGRESSIONAL INVESTMENTS 4 IN MEDICAL RESEARCH.— 5 ‘‘(A) DISTRIBUTION TO AGENCIES.—Sub- 6 ject to subparagraph (C), for the purposes de- 7 scribed in paragraph (4), the Secretary shall 8 distribute the am [Text truncated for display. 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