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Elizabeth Warren's Got a Clever Idea for Getting Big Pharma Under Control

Sen. Elizabeth Warren (D-MA) has been championing increased spending for the National Institutes of Health and greater investments in health research. The problem is, austerity still reigns in Congress and finding that funding means slicing the budgets of other programs. But she's come up with another way to get the money: big pharmaceutical companies which are prone to illegal practices.

The bill, which she intends to introduce in the Senate next week, would take money from fines levied against major pharmaceutical companies that engaged in illegal practices and use it to fund drug research at the National Institutes of Health (NIH) and the Food and Drug Administration (FDA).

"It's like a swear jar," Warren told the crowd at the Families USA Health Action Conference in Washington, according to her prepared remarks. "Whenever a huge drug company that is generating enormous profits as a result of federal research investments 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's inspiration for her proposal sounds a lot like her populist rhetoric on the campaign trail in 2012. Although pharmaceutical companies deserve some of the credit for life-saving drugs, she argued Thursday, government deserves some too. "Blockbuster drugs that generate billion-dollar profits and are used by millions of consumers don't just appear overnight as if by magic. Rarely do they appear as the result of a single, giant company's individual genius," Warren said, according to the prepared remarks. "Drug companies make great contributions, but so do taxpayers. In other words, we built those medical innovations together."

Big pharma, of course, is opposed. They argue that it would siphon money away from research and development—the threat that they always make if anyone even suggests maybe they pitch in a few bucks out of profits for the public good. Indeed, the legislation wouldn't take money from R&D because the penalty it includes is based on a percentage of profits after R&D spending—the more money spent on research and development, the lower the potential fine.

Her legislation is getting some criticism from the left, as well. Liberal economist Dean Baker argues that the money could end up benefiting big pharma anyway because the NIH usually contracts with pharmaceutical and biomedical companies. Those companies then make discoveries—with taxpayer help—that they then patent and make billions of dollars on. Baker would like to see a patent reform included in her legislation that would keep products developed with public assistance in the public domain.

Warren's legislation isn't likely to go much of anywhere in Mitch McConnell's Senate, but she's starting what could be a critical next step in healthcare reform—reining in the pharmaceutical industry. It was left essentially off the hook in Obamacare, and because it's responsible for such a huge chunk of the nation's outsized healthcare spending, it has to be tackled.

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