Bill Summary
The "Small Biotech Innovation Act" is a proposed amendment to the Social Security Act aimed at creating specific exceptions for small biotechnology manufacturers in the context of the Medicare drug price negotiation program.
Key provisions of the legislation include:
1. **Definition of Small Biotech Manufacturer**: It defines a "small biotech manufacturer" as one that produces five or fewer qualifying single-source drugs and is not controlled by foreign entities.
2. **Research and Development Investment**: To qualify for the exception, a manufacturer must be research and development-intensive, meaning it must invest a specified percentage of its net revenue from the previous three years in research and development.
3. **Exemption from Price Negotiation**: The act exempts qualifying drugs from being subject to Medicare price negotiations, with the percentage of the drug's price exempted increasing based on the number of qualifying single-source drugs a manufacturer has.
4. **Application Process**: Manufacturers seeking the exemption must apply annually, providing information on their revenue and R&D spending, along with a certification of accuracy.
5. **Dispute Resolution**: The legislation requires the creation of a process for manufacturers to appeal decisions made by the Secretary regarding their qualification status.
Overall, the act aims to foster innovation in the biotech sector by protecting small manufacturers from price negotiations that could otherwise impact their financial viability and funding for research and development.
Possible Impacts
The "Small Biotech Innovation Act" could have several impacts on people, particularly patients, healthcare providers, and small biotech companies. Here are three examples:
1. **Access to Innovative Treatments**: By exempting research and development-intensive small biotech manufacturers from the Medicare drug price negotiation program, this legislation may encourage these companies to invest more in R&D. This could lead to the development of new and innovative treatments that may not have been feasible under the constraints of price negotiations, potentially improving patient access to cutting-edge therapies for various conditions.
2. **Market Competition and Drug Pricing**: The exemption could create a more favorable environment for small biotech firms, allowing them to maintain higher prices for their drugs without the pressure of negotiation. While this might benefit these companies and their investors, it could also lead to higher drug prices for consumers, particularly those reliant on Medicare. Patients may face increased out-of-pocket costs, affecting their ability to afford necessary medications.
3. **Support for Small Biotech Companies**: This legislation may provide a significant boost to small biotech manufacturers by offering protections that allow them to focus on research and development without the immediate pressures of price negotiations. This could lead to more startups entering the biotech space, fostering innovation and job creation within the industry. However, there may also be a risk that larger pharmaceutical companies could acquire these small firms, potentially undermining the intended benefits of the legislation for the patients and the market.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1930 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1930
To amend title XI of the Social Security Act to establish a research
and development-intensive small biotech manufacturer exception from the
Medicare drug price negotiation program.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 3, 2025
Mr. Cassidy introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title XI of the Social Security Act to establish a research
and development-intensive small biotech manufacturer exception from the
Medicare drug price negotiation program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Biotech Innovation Act''.
SEC. 2. RESEARCH AND DEVELOPMENT-INTENSIVE SMALL BIOTECH MANUFACTURER
EXCEPTION FROM MEDICARE DRUG PRICE NEGOTIATION PROGRAM.
Section 1192(d)(2) of the Social Security Act (42 U.S.C. 1320f-
1(d)(2)) is amended by adding at the end the following new
subparagraph:
``(D) Research and development-intensive small
biotech manufacturer exception for 2029 and subsequent
years.--
``(i) In general.--With respect to initial
price applicability years (beginning with
initial price applicability year 2029), subject
to the succeeding provisions of this
subparagraph, the term `negotiation eligible
drug' shall not include a qualifying single
source drug (as defined in subsection (e)) of a
research and development-intensive small
biotech manufacturer (as defined in clause
(ii)).
``(ii) Definitions.--In this subparagraph:
``(I) Applicable percent.--The term
`applicable percent' means--
``(aa) in the case of a
small biotech manufacturer that
has 1 qualifying single source
drug, 30 percent;
``(bb) in the case of a
small biotech manufacturer that
has 2 qualifying single source
drugs, 40 percent;
``(cc) in the case of a
small biotech manufacturer that
has 3 qualifying single source
drugs, 50 percent;
``(dd) in the case of a
small biotech manufacturer that
has 4 qualifying single source
drugs, 60 percent; and
``(ee) in the case of a
small biotech manufacturer that
has 5 qualifying single source
drugs, 70 percent.
``(II) Small biotech manufacturer
defined.--The term `small biotech
manufacturer' means a manufacturer
that--
``(aa) has 5 or less
qualifying single source drugs;
and
``(bb) is not owned by,
controlled by, or subject to
the jurisdiction or direction
of a government of a foreign
country, or organized under the
laws of a foreign country that
is a covered nation (as defined
in section 4872(f) of title 10,
United States Code).
``(III) Research and development-
intensive small biotech manufacturer
defined.--The term `research and
development-intensive small biotech
manufacturer' means a small biotech
manufacturer that invests at least the
applicable percent of their net revenue
from the average of the previous three
years in research and development
(determined based on generally accepted
accounting principles).
``(iii) Treatment in case of acquisition.--
A drug shall not be considered to be a
qualifying single source drug of a research and
development-intensive small biotech
manufacturer if the manufacturer of such drug
is acquired after 2029 by another manufacturer
that does not meet the definition of a research
and development-intensive small biotech
manufacturer, effective at the beginning of the
plan year immediately following such
acquisition.
``(iv) Annual application.--In order for a
qualifying single source drug of a research and
development-intensive small biotech
manufacturer to be eligible for the exception
under this subparagraph with respect to an
initial price applicability year (beginning
with initial price applicability year 2029),
the manufacturer shall submit an application to
the Secretary (at a time specified by the
Secretary) containing--
``(I) information on the net
product revenue and research and
development expenditures of the
manufacturer during the relevant time
period;
``(II) a certification that the
information submitted by the
manufacturer under subclause (I) is
accurate and complete to the best of
the manufacturer's knowledge; and
``(III) such other information as
the Secretary may specify.
``(v) Dispute resolution.--The Secretary
shall develop a process under which a
manufacturer may appeal a determination by the
Secretary that the manufacturer is not a
research and development-intensive small
biotech manufacturer. Such process shall
conclude, with respect to a manufacturer, not
later than the selected drug publication date
with respect to the initial price applicability
year for which the manufacturer submitted an
application under clause (iv).''.
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