- During a conference on Thursday sponsored by the progressive health advocacy group Families USA, Sen. Elizabeth Warren (D-MA) proposed a new fund that would be used to finance FDA and NIH research by fining large pharmaceutical companies that break the law and settle claims with the federal government, The Huffington Post's Sam Stein reports.
- The fine would only be imposed on lawbreaking pharma companies that sell at least one blockbuster drug, defined as a therapy that exceeds $1 billion in annual sales.
- The amount of the fine would equal 1% of a company's total profit for each of its blockbuster drugs, according the Huffington Post. Warren claims the measure would have added $6 billion per year over the last 5 years to the NIH budget.
In prepared remarks, Warren likened the proposed fund to a "a swear jar" for pharma, and claimed that it would also encourage big pharma companies to be more accountable and less likely to skirt the law. "[T]he Medical Innovation Act will make sure that [pharma companies] pay up in a way that really makes a difference–a difference to the health of all Americans, and a difference to all of the company’s competitors who are playing by the rules," she said.
Pharma companies reach massive settlements with federal government payers and enforcement authorities all the time, most commonly for defrauding Medicare and Medicaid, paying kickbacks, and promoting off-label use of drugs. The U.S. Justice Department nabbed more than $3 billion in fines through the False Claims Act in FY2012 from healthcare and pharma companies, including a $1.5 billion civil fine on GlaxoSmithKline and a $441 million settlement with Merck over illegal marketing of the painkiller Vioxx.
A spokesperson for the PhRMA trade organization told BioPharma Dive that an official statement from the group is forthcoming. This post will be updated with that statement as soon as it is available—but chances are, the proposal is going to elicit major blowback from the industry (Note: Updated below).
One thing is clear: the NIH desperately needs more research funding. Agency director Dr. Francis Collins told the JP Morgan Healthcare Conference in San Francisco last week that the agency's purchasing power has dropped nearly 25% as a consequence of budget cuts and inflation, and that the NIH only funds about half of the research that it used to a decade ago.
UPDATE: PhRMA SVP of communications, Robert Zirkelbach, issued a statement criticizing Sen. Warren's proposal, arguing that pharmaceutical companies invest massive funds into drug discovery for the purpose of saving patients' lives and that the Medical Innovation Act is a misguided idea that will bear adverse consequences.
"[T]he biopharmaceutical pipeline has never been more promising with more than 6,800 medicines in clinical development around the world, including treatments for Ebola, Alzheimer’s, and many rare diseases," said Zirkelbach.
"The National Institutes of Health (NIH) plays a vital role in basic research and early discovery, and we support sufficient federal funding for their work. But pursuing misguided policies that siphon funding from the groundbreaking medical research happening in the biopharmaceutical industry will have devastating consequences for patients and society. The proposed legislation would result in fewer medicines for patients and lost jobs at a time when our economy can least afford it."