Now that the House is finally back in business following weeks of turmoil, including the removal of Rep. Kevin McCarthy (R-CA) as speaker and the election of Rep. Mike Johnson (R-LA) as his replacement, there’s plenty of legislative business to tackle.
That includes a return to budget battles, Israel and Ukraine funding, and other legislation. One more should be added as a top priority — the bipartisan Promising Pathway Act. The bill, sponsored by Rep. Mike Gallagher (R-WI), alongside Reps. Mike Quigley (D-IL), Bruce Westerman (R-AR), and Eric Swalwell (D-CA), would expedite provisional FDA approval for certain drugs. It’s modeled after Operation Warp Speed in 2020, when the federal government accelerated the development, manufacturing, and distribution of COVID-19 vaccines, therapeutics, and diagnostics.
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Any new drugs would require clinical trials, and a lobbying effort is now underway to change how compensation for those trials gets taxed. People who take part in a clinical trial of a new drug get paid by the company sponsoring the trial. The problem is any payment above $600 requires payment of taxes on that amount. Once a patient accepts, and before the trial starts, the company sends along IRS “Form 1099-Other income,” notifying the patient that the National Institutes of Health will report the compensation to the IRS.
One company, Mural Health, a tech platform that manages payments for clinical trial participants, wants to change that.
Clinical trials are research studies in which volunteers receive treatments under the supervision of physicians and other research professionals. The treatments get developed by pharmaceutical and biotechnology companies. The companies select physicians to act as “investigators” to conduct the trials and to determine the benefits of the drugs. Trials typically get conducted in three phases. The first phase usually involves a few people, and by the time it gets to the third, it involves a large number of volunteers. Volunteers are an integral part of the research process, and without them, clinical studies couldn’t take place.
The trials cost a significant amount of money. According to the NIH, each stage of a trial costs a median price of approximately $19 million. Some of that includes the recruitment, retention, and also replacement costs of volunteers. Compensation for clinical trials is anywhere from $150 to $13,000, depending upon the length and type of trial taking place. Some trials get conducted remotely, allowing volunteers to remain home, but most trials require on-site participation at a facility, allowing for closer monitoring, control, and administration of the drugs.
Since it requires time away from work, and the compensation gets taxed, most volunteers for clinical trials tend to be wealthier, male, and white. The success of clinical trials relies on various factors, including age, sex, the health of the patient, medical history, any previous treatments they’ve had, as well as ethnicity and race. Mural Health believes the taxation of the clinical trial compensation creates a barrier for a more diverse group of volunteers.
People who work at hourly paying jobs with limited time off would rely on the compensation of a clinical trial to cover that income. However, since the compensation is taxable after reaching the $600 threshold, it resembles an additional expense, with a possible volunteer deciding it is not worth missing work. It also has the potential to prevent those receiving public assistance from volunteering. Programs such as SNAP, Supplemental Security Income, and other assistance programs have strict income limits, creating a risk for a volunteer who receives enough compensation that brings them over those limits and risking the termination of their benefits.
Recruitment for clinical trials is an arduous process. The number of new drugs continues to increase while the pool of potential subjects is shrinking. Factor in the barrier for entry, specific lab values based on blood tests, and the necessity of having subjects stay at a facility for up to a month, and the results can be the termination or delay in the trial phase. According to the NIH, on a worldwide scale, more than “80% of trials fail to enroll on time resulting into an extension of study and or addition of new study sites.”
Mural Health hired the lobbying firm Troutman Pepper Strategies to make the case to Washington, D.C., lawmakers for the change. It won’t be easy. With strong partisan divisions over changes to tax laws, and the House Republican majority facing off against a Democratic-controlled Senate and President Joe Biden in the White House, the current legislative outlook is grim.
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Also, pharmaceutical companies and the NIH spend tens of billions of dollars per year on clinical trials. The call for eliminating taxation of compensation could bring up squabbles about “tax cuts for the rich” for wealthy volunteers, and questioning whether pharmaceutical companies will pay enough if they know people are more desperate to become a volunteer knowing the compensation is not taxable.
Opening up the clinical trial process to more volunteers by removing the tax burden that comes with compensation over $600 sounds like a straightforward decision for Republicans and Democrats. Time will tell if that’s the case.