Following Exchange with HHS Secretary Nominee, Warren, Colleagues Introduce Medical Innovation Act of 2017
Bill Increases Funding for Medical Research by Requiring Drug Companies Caught Breaking the Law to Reinvest in NIH, FDA
Nov 29, 2017
Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today introduced the Medical Innovation Act of 2017, following an exchange with Secretary-Designate of the Department of Health and Human Services (HHS) Alex Azar during his nomination hearing about how drug companies that break the law should be held accountable.
The bill, along with companion legislation introduced today in the House of Representatives by Congressman Peter Welch (D-Vt.), would increase funding for critical medical research by requiring large pharmaceutical companies that break the law and settle with the federal government to reinvest a small percentage of their profits into the National Institutes of Health (NIH) and Food and Drug Administration (FDA). Had the legislation been enacted, the Medical Innovation Act would have generated a nearly 20% increase in funding over the past five years for research supported by the NIH.
During a Senate Health, Education, Labor & Pensions Committee hearing earlier today, Senator Warren questioned Mr. Azar at length about his role as an executive at Eli Lilly during the period that the company was under investigation for promoting its anti-psychosis drug Zyprexa for uses not approved by the Food and Drug Administration. In 2009, Eli Lilly pled guilty and paid a $1.4 billion settlement, including a $515 million criminal fine - at the time, the largest such criminal fine ever imposed on a company. Had the Medical Innovation Act been in place at the time, Eli Lilly would have been required to invest approximately $2.6 billion* in the NIH and FDA.
When asked by Senator Warren whether drug companies that lie about their products or defraud taxpayers should be held accountable by the federal government, Mr. Azar answered, "Of course." However, he refused to answer whether drug company CEOs should be held personally accountable when the companies they run break the law.
"Drug companies that break the law should be held accountable - and they should also be expected to chip in to fund the next generation of medical research," said Senator Warren while introducing the legislation. "The Medical Innovation Act will substantially increase support for the NIH and take an important step toward renewing our nation's commitment to developing critical medical research."
"Too often, drug companies game the system to maximize corporate profits at the expense of consumers and taxpayers," said Congressman Welch. "This commonsense legislation will hold them accountable, while funding vital medical research that will keep America on the cutting edge of innovation, medicine, and scientific progress."
Critical federal investments in medical research have remained nearly flat for over a decade, and today 9 out of 11 research proposals are left unfunded, threatening the pace of new discoveries and undercutting America's status as the world's leader in medical innovation. The last decade has also seen a troublesome spike in the number of major drug companies settling with the government for breaking the law and defrauding taxpayers.
The Medical Innovation Act would reverse both trends by making it easier for drug companies to develop the next generation of cures and making it harder for them to profit from breaking the law and defrauding taxpayers. These payments, which would vary according to the severity of the settlement penalty, would only be required of companies that rely on federally-funded research to develop billion-dollar, "blockbuster" drugs and only when they subsequently break the law and enter into major settlement agreements with the government.
In such cases, the government settlements would go forward as they normally do, but the offending company would also be required to reinvest a relatively small portion of the profits it has generated as a result of taxpayer-supported research right back into the NIH and FDA. These supplemental payments would equal between 0.75% and 1.5% of the offending company's profits for each of its blockbuster drugs that can be traced back to government research support, over a period of five years. This funding would provide a much-needed boost to NIH and FDA funding and strengthen accountability for big drug companies caught committing wrongdoing.
Senator Warren was joined by Senators Sherrod Brown (D-Ohio), Kirsten Gillibrand (D-N.Y.), Al Franken (D-Minn.), Tammy Baldwin (D-Wisc.), and Bernie Sanders (I-Vt.) in introducing the Medical Innovation Act.
The bill text is available here and a fact sheet is available here. Video of Senator Warren's exchange with Mr. Azar is available here.
*Correction: This release was updated to reflect that Eli Lilly would have been require to invest approximately $2.6 billion in the NIH and FDA.