A tale of two medical innovation laws

June 2, 2015

On both sides of the Atlantic, fears have been raised that innovation in the medical industry is on the decline. Commentators in the United States and the United Kingdom have attributed the slowdown to various different reasons, with proponents in both countries pushing for an appropriate legislative response as a result – the Medical Innovation Act in the United States, and the Medical Innovation Bill in the United Kingdom.

Neither of these new laws is without controversy. But while the potential consequences of the Medical Innovation Act on the pharmaceutical industry are pretty clear, those of the Medical Innovation Bill are less so.

United States Medical Innovation Act

United States Senator Elizabeth Warren has said that the decline in medical innovation in her country is simply down to a lack of funding – medical research that results in significant breakthroughs costs a lot of money.

Senator Warren’s claims are supported by United States medical research agency, the National Institutes of Health (NHI), which provides more funds for medical research than any other organisation in the world. However, over the last decade, the NHI’s purchasing power has fallen by 23 percent as its budgets have remained static. NHI head Francis Collins told The Huffington Post that if the organisation had not experienced this reduction in purchasing power, it might already have a vaccine for Ebola as it has been researching the disease since 2001.

In a section entitled ‘Support the Medical Innovation Act’, Senator Warren’s website declares, ‘[I]n recent years, the great American engine of medical innovation is in trouble … Today we are choking off support for projects that could lead to the next major breakthrough against cancer, heart disease, Ebola, Alzheimer’s, diabetes, or other deadly conditions.’

In addition to highlighting the lack of funding, Warren also notes that an increasingly large number of major drug companies are falling foul of various laws. This includes ‘defrauding Medicare and Medicaid, withholding critical safety information, marketing drugs for uses they aren’t approved for, illegally incentivising doctors to prescribe drugs, and other serious violations’.

Warren believes that the combination of a decline in medical research funding and the increasing examples of misconduct by various drug companies has, inadvertently, led to the means by which the lack of innovation in the medical industry might be successfully addressed.

The Medical Innovation Act, if passed, would mean that those pharmaceutical companies that ‘enter into a settlement agreement with the government to avoid trials for breaking the law and defrauding taxpayers’ would be obliged to fund future medical research.

‘[D]rug companies that market blockbuster drugs and enter into certain settlements with the federal government would be required to pay portions of their net profits for a five-year period to the [NHI and the Food and Drug Administration],’ according to MedCity News.

‘Blockbuster drugs’ are those that prove particularly popular and, ultimately, generate over US$1 billion for a company. The Act states that any pharmaceutical company that enters into a settlement with the federal government, and which owns a blockbuster drug, would have to pay one percent of net profits for a period of five years. The Act would only apply to settlements of over US$1 million.

Perhaps unsurprisingly, there is strong opposition to the Act. According to non-profit research organisation MapLight, which tracks donations of money to political entities in the United States, the total money given to senators from interest groups supporting the Act is US$1,676,955. This compares to total donations of US$9,247,553 by those opposing the Act. Predictably, pharmaceutical manufacturers provided US$7,689,413 of this amount and are among the fiercest critics of the Act. Biotech product companies and research companies provided the rest.

Whether the Medical Innovation Act passes the United States Congress in its current form remains to be seen, but the potential consequences on the pharmaceutical industry are tangible. Compliance professionals in pharmaceutical companies are recommended to monitor passage of the law, and make any needed adjustments to their company’s compliance programme.

United Kingdom Medical Innovation Bill

The proponent of the Medical Innovation Bill, United Kingdom politician and advertising guru Maurice Saatchi, has attributed a lack of innovation in the United Kingdom medical industry to doctors’ fear of facing patient lawsuits if innovative treatment does not work. He argues that this fear of failure has led to a paralysis in the march towards further breakthroughs in the healthcare industry.

If passed, the Medical Innovation Bill would allow doctors to seek patients’ consent to use a new drug or treatment. If a patient is presented with all of the available facts (which may include the fact that any risks are not yet known) and still agrees to the treatment, then the doctor can administer the treatment without fear of being sued if it does not work.

According to the Bill’s website, the new law would ‘free your doctor to consider new treatments and ideas, safely and responsibly with your consent’. A doctor could still be sued, but ‘[t]he difference will be in cases where an innovative treatment is agreed to and tried – where the consequences cannot be known in advance’.

United Kingdom health policy ‘think tank’ the Centre for Health and the Public Interest has described the Bill as ‘bizarre’, and says that it ‘has been denounced as both unnecessary and dangerous’. However, the Bill’s website says that doctors will not be given the power to act on their own accord because ‘a doctor wishing to rely on the bill must obtain the views of at least one other qualified doctor experienced in the patient’s condition’ in advance of the treatment.

It should be noted though that the site does not expressly state that the other qualified doctor must agree with the views of the first doctor.

In an exclusive interview with Compliance Insider®, Saatchi Cancer Initiative’s communications director Dominic Nutt said that any doctor who prescribed a drug that was not in their patient’s interest but their own was ‘dangerous and immoral’. He added that if they attempted to use the Bill to do such a thing they would be ‘in serious trouble’.

Although Maurice Saatchi claims that his motivation behind the Bill was the 2011 death of his wife following her battle with ovarian cancer, and an article in digital platform Open Democracy speculated that the Bill was ‘more likely to make its proponent money than it is to help anyone who’s sick’. The article pointed out that, ‘2013 was a good year for [advertising and marketing company] M&C Saatchi Plc, of which Maurice Saatchi is a director and shareholder. CEO David Kershaw attributed the company’s 5.2 percent rise in revenues in part to “getting back into pharma”.’

One of the major frustrations for pharmaceutical companies is the length of time, and amount of money, needed to ensure that a drug is safe for public consumption. With that burden reduced as a result of the Bill, the pharmaceutical industry stands to gain hugely. ‘Doctors can try experimental treatments that have no evidence to support them, the pharmaceutical companies can supply the drugs, and the risk is borne entirely by the patient,’ said the Open Democracy article.

Nutt said that the Bill could only be used to give terminally-ill patients one or two last options and that, should a drug not work, accountability could not be passed up the line to the manufacturer.


While it is hoped that the Medical Innovation Act, in the United States, and the Medical Innovation Bill, in the United Kingdom, will successfully boost innovation in the medical industries of both countries, they will also bring challenges to compliance departments in the pharmaceutical industry. It is imperative that compliance professionals in each country maintain a functional and up-to-date compliance programme.

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