The spectacular growth of the Boston area’s life sciences sector has had a vital source: the National Institutes of Health, a lifeline of basic research funding. As part of one of the top medical clusters in the world, Boston’s research hospitals and life sciences companies received more than $1.7 billion in 2013.
The funding spigot, however, is being tightened. In the past decade, NIH grants have lost ground against the cost of doing research. A smaller percentage of projects are winning funding, and research institutions like Massachusetts General Hospital increasingly turn to private fund-raising to close the gap.
With federal funding increasingly sparse, Senator Elizabeth Warren has proposed a creative way to hold some of the beneficiaries of government-funded research accountable. Her plan, the Medical Innovation Act, is built around the idea of drug company lawbreakers chipping into a “swear jar” for their transgressions.
Warren’s plan, endorsed by nearly 30 national and local medical associations, is to bolster NIH funding by siphoning a small percentage of profits from big drug companies whose blockbuster drugs can be traced to federal funding — but only when they violate laws. “Whenever a huge drug company that is generating enormous profits as a result of federal research gets caught breaking the law — and wants off the hook — it has to put some money in the jar to help fund the next generation of medical research,” Warren said in a recent speech.
Although Warren’s analogy conjures an image of spare change, the plan would actually add up to serious money: If the policy had been in place for the past five years, it would have brought in about $6 billion per year, or about a 20 percent increase in the annual NIH budget.
Naturally, the pharmaceutical industry opposes Warren’s proposal, arguing it will hinder innovation and result in fewer medicines. But companies only have to pay this penalty in the event that they break the law (for example, by marketing drugs for uses they weren’t approved for, or by giving kickbacks to doctors for prescribing their drugs). Non-violators would face no additional costs.
Drug companies paid about $13 billion in settlements to the federal government between 2009 and 2012. With the Medical Innovation Act, Warren would effectively increase the fines; companies in violation would also have to pay 1 percent of their annual profits over five years for each blockbuster drug whose origins can be traced to basic government-funded research. Her proposal is a creative, sensible solution to boost NIH funding, and Congress should approve it.