Senator Warren Proposes ‘Swear Jar’ For Pharmaceutical Companies

According to Senator Elizabeth Warren of Massachusetts, pharmaceutical companies paid more than $13 billion in fines and/or settlements for violations of federal law.  The Senator would like to use some of that money to boost the budget of the National Institutes of Health.

The Medical Innovation Act (not yet introduced) would require large pharmaceutical companies that enter into settlement agreements with the government to contribute money to the National Institutes of Health budget.  It would be one percent of the annual profits for each ‘blockbuster drug’ that can be connected to federal research support.  The contributions to the so-called ‘swear jar’ would take place for five years – often the term of the settlement agreement entered into by the company.

There is no legislative language available just yet, so analysis based on a speech has its limitations.  The terms of the proposed legislation feed into Senator Warren’s role as a populist champion – someone targeting big companies for behavior she (and others) consider contrary to the interests of the non-rich.  That it would boost medical research is a bonus, but not really the major political motivation for the Senator.

While the additional money would be nice, it is dependent on what would be an irregular funding stream.  It would be hard to plan well for the use of the ‘swear jar’ proceeds without some kind of mechanism to provide some funding stability.  Senator Warren estimates that her legislation would have provided the NIH an additional six billion dollars per year over the last five years.  But its unrealistic to expect that the same amount of money would be available each year over the next five.

The biomedical research community is arguably still recovering from the end of the dramatic NIH budget increases around the turn of the century.  While the community would certainly welcome more money, I’m concerned that a stretch of good behavior by pharmaceutical companies would lead to halted grants and/or construction projects because this income dried up.

I like the idea – it’s an acknowledgement of how some profits from scientific and technical companies can be traced back to federal support of the underlying research.  But without a meaningful plan to properly manage this income stream, it could cause more problems than it solves.


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