The Small Biotech Innovation Act would exempt certain small biotechnology companies from Medicare's drug price negotiation program starting in 2029. Specifically, the bill creates an exception for drugs made by small biotech manufacturers that have five or fewer drugs on the market and spend a significant portion of their revenue on research and development—with the required R&D spending percentage ranging from 30 percent to 70 percent depending on how many drugs they produce. The exemption applies only to companies that are independently owned and not controlled by foreign governments. To qualify annually, manufacturers must submit applications to the Secretary of Health and Human Services documenting their R&D investments and net revenue, with a dispute resolution process available if a company's eligibility is challenged. This legislation is intended to encourage innovation in small biotechnology firms by shielding them from federal price negotiations on their limited drug portfolios.
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