H.R. 3731: Small Biotech Innovation Act

The bill known as the Small Biotech Innovation Act proposes amendments to the Social Security Act regarding the Medicare drug price negotiation program. Its primary goal is to create an exception for small biotech manufacturers that are research and development-intensive, starting from the year 2029.

Key Provisions

• Drug Price Negotiation Exemption: The bill states that certain drugs produced by qualifying small biotech manufacturers will not be subject to negotiation for price under Medicare. This applies to single source drugs produced by these small biotech companies.
• Definition of Qualifying Manufacturers: A small biotech manufacturer is defined as one that has five or fewer qualifying single source drugs and is not owned or controlled by a foreign government or incorporated under foreign laws. A "research and development-intensive" small biotech manufacturer must invest a significant percentage (30-70%) of its net revenue from the past three years into research and development, depending on the number of qualifying drugs it has.
• Applicable Percentages: The bill outlines specific percentages based on the number of qualifying single source drugs a manufacturer has:
  • 1 drug: 30%
  • 2 drugs: 40%
  • 3 drugs: 50%
  • 4 drugs: 60%
  • 5 drugs: 70%
• Acquisition Impact: If a qualifying drug's manufacturer is acquired by a company that does not meet the definition of a research and development-intensive small biotech manufacturer, that drug will no longer qualify for the exemption from negotiation starting the following year.
• Application Process: To seek this exemption, manufacturers must submit an application to a designated Secretary, providing their revenue and R&D expenditures. They must certify that the information is accurate and must include additional details as requested.
• Appeals Process: The bill establishes a process for manufacturers to appeal if they are denied the status of a research and development-intensive small biotech manufacturer, ensuring that the appeal process must conclude before the drug's initial price publication date.

Implementation Timeline

The provisions of this bill are set to take effect starting in the year 2029, impacting how Medicare negotiates drug prices for eligible drugs produced by qualifying small biotech companies.

Relevant Companies

None found