HOUSE BILL NO. 4890

July 18, 2023, Introduced by Reps. VanderWall, MacDonell, Borton, Roth, Schmaltz, Alexander and BeGole and referred to the Committee on Health Policy.

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending section 9 (MCL 125.2009), as amended by 2021 PA 136, and by adding chapter 8F.

the people of the state of michigan enact:

Sec. 9. (1) The fund shall transmit to each member of the legislature, the governor, the clerk of the house of representatives, the secretary of the senate, and the senate and house fiscal agencies annually a report of its activities. The report shall must be transmitted not later than April 10 of each year for activities in the immediately preceding state fiscal year. The report shall must not include information exempt from disclosure under section 5. The report shall must include, but is not limited to, all of the following for each program operated under this act:

(a) A list of entities that received financial assistance.

(b) The type of project or product being financed.

(c) The amount and type of financial assistance.

(d) For each separate form of financial assistance, all of the following:

(i) The number of new jobs committed or projected when the financial assistance was applied for.

(ii) The number of retained jobs committed or projected when the financial assistance was applied for.

(iii) The actual number of new jobs created that are not temporary employees.

(iv) The actual number of retained jobs that are not temporary employees.

(v) The average annual salary of the new jobs created that are not temporary employees.

(vi) The average annual salary of the retained jobs that are not temporary employees.

(e) The duration of the financial assistance.

(f) The amount of financial support other than state resources.

(g) Money or other revenue or property returned to the fund, including any repayments through a clawback provision in the agreement.

(h) The status of all loans of the fund.

(i) A list of all entities that are in bankruptcy, that of which the fund has received actual notice, of, filed by a direct recipient of an active single incentive of at least not less than $500,000.00. In addition, the fund shall, within 120 days after the fund receives notice, provide a report of the notice of bankruptcy on its website and shall forward the report to each of the following:

(i) The senate majority leader and the senate minority leader.

(ii) The speaker of the house and the house minority leader.

(iii) The members of the house commerce and tourism committee.

(iv) The members of the house appropriations subcommittee on general government.

(v) The members of the senate economic and small business development committee.

(vi) The members of the senate appropriations subcommittee on general government.

(j) A summary of the approximate administrative costs used to administer the programs and activities authorized under this act.

(k) Any other information as required in by this section.

(2) The auditor general or a certified public accountant appointed by the auditor general annually shall conduct and remit to the legislature an audit of the fund and, in the conduct of the audit, shall have access to all records of the fund at any time, whether or not confidential. Each audit required by this section shall must include a determination of whether the fund is likely to be able to continue to meet its obligations, including a report on the status of outstanding loans and agreements made by the fund.

(3) The fund shall also transmit the audit described in subsection (2) to the chairperson and minority vice-chairperson of the senate appropriations subcommittee on general government and the house of representatives appropriations subcommittee on general government. The fund shall make the report and audit available to the public on the fund's website.

(4) The report described in subsection (1) must also contain all of the following that are related to a 21st century investment made by the fund board under chapter 8A:

(a) The amount of qualified venture capital fund investments, qualified mezzanine fund investments, and qualified private equity fund investments under management in this state, including year-to-year growth.

(b) The value of loan enhancement program investments, qualified private equity fund investments, qualified mezzanine fund investments, and qualified venture capital investments in qualified businesses, including year-to-year growth.

(c) A statement of the amount of money in each loan reserve fund established under the small business capital access program required under chapter 8A.

(5) The report described in subsection (1) must also include, but is not limited to, all of the following for all actions under section 88r:

(a) The total actual amount of qualified investment attracted under section 88r as reported to the fund.

(b) The total actual number of new jobs created under section 88r as reported to the fund.

(c) The actual amount of the grant, loan, or other economic assistance made under section 88r separately for each qualified business verified by the fund.

(d) For each qualified business, whether it is a new business, whether it is an expansion of an existing business, or whether it relocated from outside of this state.

(e) An evaluation of the aggregate return on investment that this state realizes on the actual qualified new jobs and actual qualified investment made by qualified businesses.

(6) The report described in subsection (1) must also include, but is not limited to, all of the following for all actions under chapter 8B:

(a) For tourism promotion efforts, all of the following:

(i) An itemized list, by market, of how much was spent, types of media purchased, and target of the tourism promotion campaign.

(ii) The return on investment analysis that utilizes existing baseline data and compares results with prior outcome evaluations funded by Travel Michigan.

(b) For business development efforts, all of the following:

(i) An itemized list, by market, of how much was spent, types of media purchased, and target of the business promotion campaign.

(ii) A performance analysis that compares the program or campaign objectives and outcome of the campaign or program.

(7) The report described in subsection (1) must also include, but is not limited to, all of the following for all actions under section 90d:

(a) The total actual amount of private investment attracted under section 90d as reported to the fund.

(b) The actual amount of the community revitalization incentives made under chapter 8C separately for each project.

(c) The total actual amount of square footage revitalized or added for each project approved under section 90d as reported to the fund. When reporting square footage, the person must report the square footage by category, including, but not limited to, commercial, residential, or retail.

(d) The aggregate increase in taxable value of all property subject to a written agreement under chapter 8C when established and recorded by the local units of government and as reported to the fund.

(e) The total actual number of residential units revitalized or added for each project approved under section 90d as reported to the fund.

(f) Each project that received a community revitalization incentive outside the fund program standards and guidelines and why the variance was given.

(8) Beginning on and after January 1, 2012, on a monthly basis the fund shall provide exact copies of all information regarding all actions under chapter 8C that is provided to board members of the fund for the purpose of monthly board meetings, subject to confidentiality under section 5, to each of the following and post that information on the fund's website:

(a) The chairperson and minority vice-chairperson of the house commerce and tourism committee.

(b) The chairperson and minority vice-chairperson of the house appropriations subcommittee on general government.

(c) The chairperson and minority vice-chairperson of the senate economic and small business development committee.

(d) The chairperson and minority vice-chairperson of the senate appropriations subcommittee on general government.

(9) The report described in subsection (1) must also include a summary of the approximate administrative costs used to administer the programs and activities authorized in the following sections:

(a) Section 88b.

(b) Section 88h.

(c) Section 90b.

(10) The report described in subsection (1) must also include, but is not limited to, all of the following for all actions for business incubators approved by the fund after January 14, 2015:

(a) The number of new jobs created and projected new job growth by current clients of the business incubator.

(b) Amounts of other funds leveraged by current clients of the business incubator.

(c) Increases in revenue for current clients of the business incubator.

(11) The report described in subsection (1) must also include the actual repayments received by the fund for failure to comply with clawback provisions of the written agreement under all of the following:

(a) Section 78.

(b) Section 88d.

(c) Section 88k.

(d) Section 88q.

(e) Section 88r.

(f) Section 90b.

(12) Beginning on July 1, 2015, the fund shall post on the fund's website a list of each contract, agreement, or other written loan or grant documentation for financial assistance under sections 88r and 90b that the fund entered into or modified in the immediately preceding fiscal year.

(13) Beginning on July 1, 2015, the fund shall post and update periodically all of the following on its website for all loans made under sections 88r and 90b:

(a) A description of the project for which the loan was made.

(b) The total amount of the loan.

(c) Whether payments on the loan balance are current or delinquent.

(d) The interest rate of the loan.

(14) Beginning July 1, 2015, the report described in subsection (1) shall must also contain all of the following for each program that provides financial assistance under this act that requires a site visit:

(a) A copy of the site visit guidelines for that program.

(b) The number of site visits conducted under that program.

(c) The chief compliance officer shall review and evaluate compliance with the site visit guidelines.

(15) The fund shall post on its website and update periodically all of the information described in subsection (14).

(16) The report described in subsection (1) must also include, but is not limited to, all of the following for all written agreements related to the good jobs for Michigan program created under chapter 8D:

(a) The name of the authorized business.

(b) The number of certified new jobs required to be maintained.

(c) The amount and duration of the withholding tax capture revenues.

(17) The report described in subsection (1) must also include the activities of the critical industry program described in section 88s.

(18) The report described in subsection (1) must also include the activities of the Michigan strategic site readiness program described in section 88t.

(19) The report described in subsection (1) must also include the activities of the insulin production program described in chapter 8F. The information provided under this subsection must include all of the following:

(a) The name of the private sector contractor selected as a partner for purposes of the insulin production program.

(b) The amount of any grant award to the private sector contractor.

(c) The location and status of the insulin facilities.

(d) The types and amounts of insulin produced.

(e) The retail price of the insulin produced.

(f) The percentage of insulin produced that was sold to this state.

(g) The percentage of insulin produced that was sold in this state.

(h) The name of any temporary private sector contractors selected to provide insulin to this state under section 90x and the amount of insulin purchased by this state from each temporary private sector contractor.

(20) (19) As used in this section, "financial assistance" means grants, loans, other economic assistance, and any other incentives or assistance under this act.

CHAPTER 8F

Sec. 90t. (1) The legislature finds that the cost of insulin medications, particularly long-acting insulin, has risen to an unacceptable level, and that this increase has resulted in reduced access to life-sustaining medications for many residents of this state with diabetes.

(2) It is the intent of the legislature that the insulin production program will do all of the following:

(a) Create a strategic partnership between this state and a private sector contractor for the production and distribution of insulin medications in this state.

(b) Foster the creation of skilled biopharmaceutical manufacturing jobs in this state.

(c) Ensure that residents of this state have access to affordable generic or biosimilar forms of long-acting insulin and other insulin medications.

(3) The legislature finds that the insulin production program is a public purpose and of paramount concern in the interest of the health, safety, and general welfare of the residents of this state. It is the intent of the legislature that the economic benefits resulting from this chapter occur substantially within this state.

Sec. 90u. As used in this chapter:

(a) "CFIUS" means the Committee on Foreign Investment in the United States.

(b) "CFIUS clearance" means either of the following as reflected by a written notice from CFIUS:

(i) CFIUS has determined that the transaction is not a covered transaction or covered real estate transaction subject to review under the DPA.

(ii) CFIUS has completed its review or investigation of the transaction, determined that there are no unresolved national security concerns with respect to the transaction, and advised that all action under the DPA has concluded with respect to the transaction.

(c) "Covered real estate transaction" means that term as defined in 31 CFR 802.212.

(d) "Covered transaction" means that term as defined in 31 CFR 800.213.

(e) "DPA" means section 721 of the defense production act of 1950, 50 USC 4565, and the implementing regulations at 31 CFR parts 800 to 802.

(f) "Foreign person" means that term as defined in 31 CFR 800.224 or 802.221.

(g) "Insulin distribution facility" means 1 or more facilities or operations that store and distribute insulin for medical use.

(h) "Insulin facilities" means facilities that include both an insulin production facility and an insulin distribution facility.

(i) "Insulin production facility" means 1 or more facilities or operations that manufacture insulin for medical use.

(j) "Insulin production fund" means the insulin production fund created in section 90w.

(k) "Insulin production program" means the insulin production program created in section 90v.

(l) "Pharmacy benefit manager" means that term as defined in section 7 of the pharmacy benefit manager licensure and regulation act, 2022 PA 11, MCL 550.817.

(m) "Private sector contractor" means an entity in the private sector that develops generic or biosimilar insulin for medical use.

(n) "Temporary private sector contractor" means a private sector contractor with an insulin product that has already received approval from the United States Food and Drug Administration.

Sec. 90v. (1) The fund shall create and operate the insulin production program to partner with a private sector contractor to establish insulin facilities in this state that manufacture and distribute, at a minimum, long-acting insulin. Under the insulin production program, this state shall own the real property where the insulin facilities are located, and the private sector contractor selected as a partner shall operate and maintain the insulin facilities.

(2) To select a private sector contractor as a partner for the insulin production program as described in subsection (1), the fund shall issue a request for proposal and receive bids from private sector contractors. In evaluating the proposals submitted under this subsection, the fund shall give priority to a private sector contractor that meets the following requirements:

(a) Has an insulin product that has already received or is in the process of receiving approval by the United States Food and Drug Administration.

(b) Proposes to manufacture rapid-acting insulin in addition to long-acting insulin.

(c) Is able to establish the insulin facilities in this state in an expedient time frame.

(3) Subject to the requirement in subsection (1) that this state own the real property where the insulin facilities are located, all of the following apply:

(a) The fund may provide a grant of not more than $150,000,000.00 to the private sector contractor selected under this section for the construction of new insulin facilities or renovation of existing facilities into insulin facilities.

(b) The insulin facilities must be located at a location jointly determined by the fund and the private sector contractor.

(c) The insulin distribution facility must be constructed or renovated before the insulin production facility is constructed or renovated.

(4) The fund shall not select a private sector contractor under this section unless the private sector contractor does all of the following:

(a) Demonstrates that it has a development plan in place to bring to market the insulin products proposed for manufacture in both vials and prefilled pens.

(b) Demonstrates it has sufficient available funding to implement the development plan described in subdivision (a). The sufficient available funding may include the amount of any grant provided under subsection (3).

(c) Obtains any necessary license under part 177 of the public health code, 1978 PA 368, MCL 333.17701 to 333.17780.

(d) Agrees to contract with this state in accordance with subsection (5).

(5) Subject to subsection (6), the fund shall enter into a written agreement with the private sector contractor selected under this section that includes in a clear and concise manner all of the terms and conditions related to the partnership, as determined by the fund, including, but not limited to, all of the following:

(a) The amount of any grant award under subsection (3).

(b) The location of the insulin facilities, a provision that the real property where the insulin facilities are located is owned by this state, and, if applicable, a requirement that the private sector contractor execute all necessary documents to vest ownership of the real property in this state.

(c) The types of insulin to be produced.

(d) Applicable milestones.

(e) A requirement that the private sector contractor make insulin available at a transparent price, including a description of any price caps.

(f) A requirement that the private sector contractor sell the insulin without rebates to a pharmacy benefit manager and a provision that, if the private sector contractor cannot meet this requirement, this state may distribute the insulin on behalf of the private sector contractor.

(g) A requirement that the private sector contractor make insulin available in such a manner as to facilitate insulin availability to and benefit the residents of this state, including any applicable distribution requirements.

(h) A requirement that the private sector contractor make insulin branded with state of Michigan labels available for purchase by this state, including a description of any minimum quantities to be produced for purchase by this state.

(i) A repayment provision that requires the private sector contractor to repay all or a portion of the grant award due to a breach of the written agreement under this subsection, a failure to meet applicable milestones, or another misuse of the money, unless both of the following conditions are met:

(i) The breach, failure, or other misuse is caused by circumstances beyond the control of the private sector contractor, including, but not limited to, acts of God, wars, strikes, riots, catastrophes, acts of government, or other conditions beyond the control of the private sector contractor.

(ii) The private sector contractor did not have reason to know of the circumstances described in subparagraph (i) when the written agreement was executed.

(j) The term of the written agreement, which must not be less than 15 years.

(k) Periodic reporting requirements to ensure compliance with the agreement under this subsection and facilitate the fund's report under section 9.

(6) If the private sector contractor selected by the fund is a foreign person, the fund shall not enter into a written agreement under subsection (5) unless the fund files a declaration or notice of the transaction with CFIUS under the DPA and receives CFIUS clearance.

Sec. 90w. (1) The insulin production fund is created in the state treasury.

(2) The state treasurer shall deposit money and other assets received from any source in the insulin production fund. The state treasurer shall direct the investment of money in the insulin production fund and credit interest and earnings from the investments to the insulin production fund.

(3) Money in the insulin production fund at the close of the fiscal year remains in the insulin production fund and does not lapse to the general fund.

(4) The fund is the administrator of the insulin production fund for audits of the insulin production fund.

(5) The fund shall expend money from the insulin production fund, on appropriation, only for 1 or more of the following purposes:

(a) Administering the insulin production program.

(b) Awarding a grant to a private sector contractor under the insulin production program.

(c) Purchasing insulin from a private sector contractor or temporary private sector contractor.

(d) Taking any other action that is necessary to achieve the purposes of the insulin production program.

Sec. 90x. (1) Until the insulin production facility is completed, the fund shall annually issue a request for proposal and receive bids from temporary private sector contractors to sell generic or biosimilar insulin for medical use to this state, subject to both of the following requirements:

(a) The temporary private sector contractor must make insulin branded with state of Michigan labels available for purchase by this state.

(b) The temporary private sector contractor must sell the insulin without rebates to a pharmacy benefit manager.

(2) The fund shall enter into a written agreement with a temporary private sector contractor selected under this section that includes the requirements described in subsection (1), the quantities of insulin to be provided, the purchase price of the insulin, the term of the agreement, which must not exceed 1 year, and any other terms the fund considers necessary.

(3) The fund shall not purchase insulin under this section unless the insulin distribution facility is completed or the fund has another state facility that can be used for the storage and distribution of the insulin.