House Passes 21st Century Cures Act, Including a New NIH Innovation Prize Fund

By Rachel Sachs

This morning, the House of Representatives passed the 21st Century Cures Act by a vote of 344-77, achieving a truly bipartisan result in a difficult political environment.  (I’ve blogged about the Act several times now, and the House Energy & Commerce Committee has a clear section-by-section summary here.)  There is much to like in the bill (such as the increased NIH funding), much to be concerned about (such as some of the provisions abbreviating FDA review of drugs and devices), and much whose value will depend on implementation.  It’s also not certain that any of these provisions will ultimately become law – the Senate has yet to even introduce its own draft bill, let alone vote on it or achieve a consensus with the House.  But I wanted to use this post to draw attention to a new amendment to the Act that was introduced a few days ago and approved by the House this morning prior to the vote on the full bill.

Representatives Todd Young (R-IN) and Andy Harris (R-MD) introduced an amendment creating an Innovation Prize Program within the NIH.  As the text stood on Wednesday (speakers on the floor of the House today suggested that some of this language is likely to change, if it has not already changed), it instructed the Director of the NIH to create the fund in service of one or both of these two goals: 1) “Identifying and funding areas of biomedical science that could realize significant advancements through the creation of a prize competition” and 2) “Improving health outcomes, particularly with respect to human diseases and conditions for which public and private investment in research is disproportionately small relative to Federal Government expenditures on prevention and treatment activities, thereby reducing Federal expenditures on health programs.”  The Director is also given wide discretion to design prize competitions, including whether they involve a lump-sum award at the end or are parceled out in milestone payments along the way.

Of particular interest to scholars of alternative innovation mechanisms like prize funds will be the provisions relating to prize governance and restrictions on the prize award.  The “I-Prize Board” aiding the Director in this process is composed of nine voting members: the Director, four of the Director’s appointees, and four Congressional appointees (by the majority and minority leaders in both houses of Congress).  During debate over the amendment, at least one Representative expressed concern that this composition would inject too much of a political angle into prize creation and awards.  This is of course a possible concern, but the amendment’s additional requirement that the Board include members with particular areas of expertise (including “medical, economic, budgetary, innovation, or venture capital experts from for-profit and not-for-profit private sector entities”) might serve as a mitigating factor.

Perhaps most interestingly, the amendment explicitly prohibits the program from awarding a prize “to any individual or entity that has a vested financial interest in any product or procedure that is likely to be developed or marketed because of such innovation.”  However, the amendment does not attempt to strip an applicant for a prize of their ability to obtain intellectual property rights of various kinds (indeed it contemplates that there will be such IP).  How the ability to obtain patents interfaces with the prohibition of an award to any entity with a vested financial interest is not obvious to me, at least in the large majority of cases (leaving open-source approaches aside, for instance).  I welcome input from anyone with insight on this point.

Although the Senate isn’t likely to take up its own version of the Act for quite some time, I’ll be following this process closely for the development of this prize fund.

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