Medical Innovation Act applies to pharmaceutical companies who are found guilty or are accused of breaking the law and settle with the federal government.

WASHINGTON, D.C. – U.S. Senator Peter Welch (D-Vt.) joined U.S. Senator Elizabeth Warren (D-Mass.) and U.S. Representative Jan Schakowsky (D-IL-09) in introducing the Medical Innovation Act of 2024, which would require large pharmaceutical companies that are accused of breaking the law and settle with the federal government to reinvest a small percentage of their profits into the National Institutes of Health (NIH) and the U.S. Food and Drug Administration (FDA).

“The Medical Innovation Act is a commonsense way to advance more medical research by holding shady pharmaceutical companies accountable when they break the law,” said Senator Welch. “I led this bill as a member of the House and am fighting today with my colleagues Senator Warren and Representative Schakowsky to maintain America’s leadership in biomedical science.”

“Big Pharma shouldn’t be able to defraud the federal government and get away with just a slap on the wrist,” said Senator Warren. “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.”

“For too long, drug companies that rely on federally-funded research to develop their blockbuster drugs have gotten away with defrauding consumers and taxpayers,” said Congresswoman Jan Schakowsky. “The Medical Innovation Act would make it more difficult for these drug companies to game the system by requiring them to provide a share of their profits to increase investments in biomedical research at the National Institutes of Health and the Food and Drug Administration. We can continue to be a leading force in medical innovation and this legislation will help ensure that we have the means to cure diseases and save lives.”

In 2023, the NIH only had funds for 23% of the applications it received, contributing to a huge medical innovation gap. At the same time, pharmaceutical companies have been accused of defrauding Medicare and Medicaid, marketing drugs for unapproved uses, illegally incentivizing doctors to prescribe drugs, lying about the safety of their drugs, and violating other criminal and civil laws. The companies have settled many of these claims with the federal government, treating the fines as a cost of doing business. Most recently, Teva Pharmaceuticals agreed to pay the Justice Department $450 million to settle a set of lawsuits alleging that the company defrauded Medicare and conspired with other drug-makers to illegally inflate the prices of two generic drugs. Between 2019 and October 2024, the Department of Justice pursued new actions against or settled cases with at least 40 pharmaceutical companies. 

The Medical Innovation Act would: 

• Require pharmaceutical companies accused of breaking the law to reinvest a small percentage of their profits in NIH and FDA. These payments would increase with the severity of the settlement penalty, and would only be required of companies that rely on federally-funded research to develop billion-dollar, “blockbuster” drugs.  
• Invest in life-saving medical innovation through the NIH and FDA. Payments collected through this bill would be used to develop treatments and diagnostics to address unmet medical needs; support research grants for early career scientists; research diseases that disproportionately contribute to federal health care spending; and advance basic biomedical research, among other uses.
• Promote sustained investments in biomedical research. To ensure that the Act results in a net increase in funding for medical research, money from the supplemental settlement fees would only be available in years that annual appropriations for NIH and FDA are equal to or greater than appropriations for the agencies in the prior fiscal year.    

Senator Welch introduced the Medical Innovation Act as a Member of the House of Representatives in the 114th Congress alongside Senator Warren and they have pushed for the legislation since 2015. The Medical Innovation Act is cosponsored this Congress by Senators Sherrod Brown (D-Ohio), Bernie Sanders (I-Vt.), Chris Van Hollen (D-Md.), and Sheldon Whitehouse (D-R.I.).

This bill is endorsed by the National Women’s Health Network, AIDS United, University of Massachusetts Medical School, Society of Behavioral Medicine, Families USA, Public Citizen, and the Massachusetts Medical Society. 

View the bill text of the Medical Innovation Act.

Read more about the Medical Innovation Act.

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