Warren Introduces Medical Innovation Act

Sen. Elizabeth Warren (D-MA) has proposed new legislation that aims to bolster financial support for the NIH and the FDA and discourage large pharmaceutical companies from violating federal laws.

Under this “Medical Innovation Act,” offending companies that opt to settle federal lawsuits will pay an additional 5-year penalty: 1% of their annual profits on blockbuster drugs—drugs with annual sales that top $1 billion—whose development can be traced to federally funded research. These penalties will supplement existing funds for NIH and FDA research on unmet or undermet medical needs, fundamental biological processes, and diseases that disproportionally affect government spending.

“This isn't a tax,” Warren said at the recent Families USA Health Action Conference in Washington, DC. “It's simply a condition of settling to avoid a trial in a major case of wrongdoing. If a company never breaks the law, it will never pay the fee. If an accused company goes to trial instead of settling out of court, it will never pay the fee, even if it loses the case.”

Warren wants to reverse two worrisome trends: dwindling federal funding for medical research and an increasing number of violations among major pharmaceutical companies—defrauding Medicare and Medicaid, for instance, or withholding critical safety information. She likens the new legislation to a “swear jar” and says it's “a simple form of accountability that will make sure [lawbreaking companies] pay up in a way that really makes a difference.”

Had this policy been in place over the last 5 years, Warren estimates that the NIH's annual budget would have increased by almost 20%. Budget projections based on this time period could be overly optimistic, however, because “the last 5 years have also seen the biggest [pharmaceutical company] fines ever,” writes veteran industry-watcher Derek Lowe, PhD, who blogs at In The Pipeline.

If Congress wants to increase funding for medical research, Lowe adds, it should be done “the old-fashioned way, by voting on a budgetary resolution.” Then the NIH and FDA “will know what's coming, when it's showing up, and can figure out what best to do with the money.”

The Medical Innovation Act is currently assigned to the Senate Committee on Health, Education, Labor, and Pensions. Its co-sponsors are Tammy Baldwin (D-WI), Sherrod Brown (D-OH), and Benjamin Cardin (D-MD).