Sen. Elizabeth Warren (D-Mass.) and Rep. Jan Schakowsky (D-Ill.) have introduced legislation that would require pharmaceutical companies who have entered settlement agreements over violating federal law to invest a portion of their profits into key agencies.
Titled the “Medical Innovation Act,” the bill would apply to large drugmakers who are found to have violated federal laws and also have received federal funding that helped them develop what the bill calls “blockbuster drugs.” The legislation defines these drugs as those that had net sales of at least $1 billion in the previous calendar year.
Funds collected through this legislation would go towards initiatives in the National Institutes of Health and the Food and Drug Administration. Companies would be required to invest a percentage of their profits into these federal health agencies for five years.
Warren’s office identified at least 40 pharmaceutical companies in the last five years that would be affected by this bill.
“Big Pharma shouldn’t be able to defraud the federal government and get away with just a slap on the wrist,” Warren said in a statement. “This bill will help us save lives by ensuring giant drug companies that enter into settlement agreements with the federal government chip in to fund the next generation of medical research.”
The percentage required to be invested would grow in proportion to the amount of settlement the company agreed to with the federal government.
Companies with settlements of $500 million or less would be obligated to pay .75 percent of net income; 1 percent if the settlement is between $500 million and $1 billion; and 1.5 percent if the settlement is at least $1 billion.
Under the bill, the funds would be allocated to developing treatments and diagnostics for unmet medical needs; research grants for early career scientists; research into diseases that disproportionately contribute to federal health care spending; and the advancement of basic biomedical research.