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January 23, 2015

Sen. Warren Proposes "Swear Jar" to Help Fund NIH

  • U.S. Sen. Elizabeth Warren (D-MA) yesterday announced plans for a bill requiring part of the fines paid by big biopharma in settlements be diverted to a new fund to help pay for future basic research—less than a month after her party was relegated to minority status in the U.S. Senate.

    Warren said her envisioned fund—what she dubbed a “swear jar”—would be filled by big biopharmas paying into it “1% of a company’s annual profits for each blockbuster drug that can be traced to government research support,” she said yesterday, addressing the Families USA Health Action conference in Washington, D.C.

    Warren used the industry definition for blockbusters as treatments that generate $1 billion or more in annual sales. About 100 different drugs fit into the blockbuster category, she said. Penalized companies would have their fines diverted to the fund for up to five years, which she noted was the typical length of federal settlement agreements.

    Warren’s proposal fund is within a bill she said she will introduce next week, called the “Medical Innovation Act.” She urged Families USA conference attendees to join her in pursuing approval of the bill.

    “It’s like a swear jar: Whenever a huge drug company that is generating enormous profits as a result of federal research investments gets caught breaking the law—and wants off the hook—it has to put some money in the jar to help fund the next generation of medical research,” Warren said, according to a text of her speech posted on her website.

    “It’s a swear jar—but it’s also a simple form of accountability. Instead of getting companies that break the law get off with a slap on the wrist, the Medical Innovation Act will make sure that they 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,” Warren added.

    Warren’s proposed legislation drew criticism yesterday from one industry group. The Pharmaceutical Research and Manufacturers of America (PhRMA) issued a statement that voiced support for “sufficient” federal funding for NIH—though not through the “Medical Innovation Act.”

    “Pursuing misguided policies that siphon funding from the groundbreaking medical research happening in the biopharmaceutical industry will have devastating consequences for patients and society,” PhRMA argued. “The proposed legislation would result in fewer medicines for patients and lost jobs at a time when our economy can least afford it.”

    Warren contended the bill would help satisfy the need for additional research funding—a need she said would grow since the Senate and House of Representations are now majority Republican, with numerous lawmakers committed to cutting federal spending, including basic research.

    Had the Medical Innovation Act been in effect over the past five years, Warren said, NIH would have seen $6 billion more each year, or roughly 20% above its annual budgets during the period.

    NIH has struggled in recent years with inconsistent federal budgeting that has yo-yoed between below-inflation increases and, as in the sequestration-skewed 2013 fiscal year, reduced spending. The struggle is an outgrowth of the sharply contentious party politics of recent years, even though lawmakers in both parties have expressed support for higher NIH spending.

    Even late last year, with a Democratic majority in the Senate that positioned itself as favoring greater NIH funding, the agency managed a mere $150 million (0.5%) increase in the fiscal year 2015 budget agreement hammered out last month compared to FY 2014.

    “I believe we should double NIH funding. But a potential 20% increase in NIH funding that also holds drug companies accountable when they break the law is great first step,” Warren said.

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