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Tags: 110th congress, cines, committee on health education labor and pensions, health education, incentives, medi, mr sanders, new medicines, october 19, research and development, senate, states of america, tives, united states of america,Pages: 23
Language: english
Created: Mon Oct 22 17:32:26 2007
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II
110TH CONGRESS
1ST SESSION
S. 2210
To provide incentives for investment in research and development for new
medicines, to enhance access to new medicines, and for other purposes.
IN THE SENATE OF THE UNITED STATES
OCTOBER 19, 2007
Mr. SANDERS introduced the following bill; which was read twice and referred
to the Committee on Health, Education, Labor, and Pensions
A BILL
To provide incentives for investment in research and develop-
ment for new medicines, to enhance access to new medi-
cines, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the ``Medical Innovation
5 Prize Act of 2007''.
6 SEC. 2. FINDINGS.
7 Congress makes the following findings:
8 (1) Current incentives for research and develop-
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9 ment for new medicines that involve market exclu-
10 sivity lead to high prices.
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1 (2) High prescription drug prices create hard-
2 ships on patients, employers, and taxpayers who pay
3 for medicines, as well as increasing restrictions on
4 access to medicines, through limited availability of
5 high priced medicines by health insurance plans.
6 (3) In addition, when marketing exclusivity is
7 the reward for successful research and development
8 efforts, companies have incentives to invest enor-
9 mous sums in marketing of products, and in the de-
10 velopment of medicines that do not offer significant
11 incremental medicinal benefits over existing prod-
12 ucts.
13 (4) According to the Food and Drug Adminis-
14 tration, of the 1,284 new drug approvals from 1990
15 to 2004, only 289, or 22.5 percent, were for ``pri-
16 ority'' reviews (defined as a product that has ``sig-
17 nificant improvement compared to marketed prod-
18 ucts in the treatment, diagnosis, or prevention of a
19 disease''). Of these, only 183 (14.3 percent of the
20 total) were new molecular entities classified as pri-
21 ority products.
22 (5) Thus, there are important gaps in treat-
23 ments for many severe illnesses.
24 (6) The existence of neglected diseases in other
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25 regions of the world leads to immense suffering and
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1 death, undermines development, shrinks potential
2 markets, and has long-term negative effects for
3 United States security.
4 (7) Emerging diseases, viral mutations, and
5 food-borne disease transmitted through international
6 trade have negative effects on Americans and must
7 be combated before they arrive on the Nation's
8 shores.
9 (8) Exclusive rights to market products are one
10 way to reward successful product research and devel-
11 opment, but not the only way. Prize funds are an-
12 other way and have been used successfully to stimu-
13 late inventions and solutions to difficult problems.
14 (9) Awards to companies through a prize fund
15 mechanism that reward successful product research
16 and development can de-couple the reward for prod-
17 uct research development from the price of the prod-
18 uct.
19 (10) Awards to pharmaceutical companies for
20 successful product research and development can be
21 targeted at products that improve health care out-
22 comes, and can stimulate research and development
23 in the areas of greatest need.
24 (11) The implementation of a prize fund and
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25 the elimination of exclusive rights to sell new medi-
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1 cines will lead to entry by generic manufacturers,
2 and lower prices for prescription drugs. This will
3 eliminate the need for price sensitive formularies,
4 and reduce other barriers to access to new medi-
5 cines.
6 (12) At present, generic products represent
7 more than 63 percent of pharmaceutical prescrip-
8 tions, but only 20 percent of the money spent on
9 prescription drugs, for an average cost saving of 85
10 percent for generic prescriptions.
11 (13) The combined cost to the Federal Govern-
12 ment of purchases, reimbursements, and subsidies
13 for medicines, including Federal outlays relating to
14 Medicare, Medicaid, purchases of medicines by the
15 Department of Defense and the Department of Vet-
16 erans Affairs, and outlays related to the Federal
17 Employees Health Benefits Program, is expected to
18 exceed $100,000,000,000 in 2007, and grow faster
19 than the overall rate of growth in the Gross Domes-
20 tic Product.
21 (14) The cost of total United States outlays for
22 pharmaceutical drugs was more than
23 $274,000,000,000 in 2006, measured at manufac-
24 turer's prices, an increase of more than 82 percent
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25 since 2000.
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1 (15) The substitution of prize fund awards to
2 companies for successful product research and devel-
3 opment in place of marketing exclusivity for new
4 medicines will lead to more competition, greater uti-
5 lization of generic products, lower prices, and sav-
6 ings to Federal, State and local governments, private
7 employers and individual consumers of more than
8 $200,000,000,000 per year. Savings in governmental
9 expenditures alone would be more than sufficient to
10 fund the prize fund established through this legisla-
11 tion.
12 (16) Basing the level of funding for innovation
13 prizes on a share of Gross Domestic Product will en-
14 sure a sustainable and forward looking commitment
15 to stimulate innovation for new medicines.
16 (17) Current United States outlays on pharma-
17 ceutical drugs are more than 2.2 percent of Gross
18 Domestic Product.
19 (18) By funding innovation prizes at 0.6 per-
20 cent of Gross Domestic Product, the United States
21 will provide an incentive for innovation that would
22 be more than $80,000,000,000 in 2007, an amount
23 that is more than 5 times the average rate of royal-
24 ties for patent owners, and more than 4 times the
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25 level of private sector research and development
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1 spending that would be assigned to the United
2 States market, based upon the United States share
3 of global Gross National Product.
4 (19) The 2007 cost of the innovation prizes will
5 be much lower than the $200,000,000,000 in re-
6 duced United States outlays for pharmaceutical
7 drugs, it will vastly expand access to medicines, and
8 it will ensure that future research and development
9 for new medicines is targeted at treatments that im-
10 prove health care outcomes and address public
11 health priorities.
12 SEC. 3. PURPOSE.
13 It is the purpose of this Act to provide incentives to
14 encourage entities to invest in research and development
15 of new medicines through the establishment of a Medical
16 Innovation Prize Fund and to enhance access to such
17 medicines by allowing any person in compliance with Food
18 and Drug Administration requirements to manufacture,
19 distribute, or sell an approved medicine.
20 SEC. 4. DEFINITIONS.
21 In this Act:
22 (1) BIOLOGICAL PRODUCT.--The term ``biologi-
23 cal product'' has the meaning given such term in
24 section 351 of the Public Health Service Act (42
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25 U.S.C. 262).
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1 (2) BOARD.--The term ``Board'' means the
2 Board of Trustees for the Fund for Medical Innova-
3 tion Prizes established under section 7.
4 (3) DRUG.--The term ``drug'' has the meaning
5 given such term in section 201 of the Federal Food,
6 Drug, and Cosmetic Act (21 U.S.C. 321).
7 (4) FUND.--The term ``Fund'' means the Fund
8 for Medical Innovation Prizes established under sec-
9 tion 6.
10 (5) MARKET CLEARANCE.--The term ``market
11 clearance'' means the approval of an application
12 under section 505 of the Federal Food, Drug, and
13 Cosmetic Act (21 U.S.C. 355) or the approval of a
14 biologics license application under subsection (a) of
15 section 351 of the Public Health Service Act (42
16 U.S.C. 262).
17 SEC. 5. ELIMINATION OF EXCLUSIVE RIGHTS TO MARKET
18 DRUGS AND BIOLOGICAL PRODUCTS.
19 (a) IN GENERAL.--Notwithstanding title 35, United
20 States Code, relevant provisions of the Federal Food,
21 Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) (including
22 amendments made by the Drug Price Competition and
23 Patent Term Restoration Act of 1984 (Public Law 98
24 417; referred to as the ``Hatch-Waxman Act'')), the Medi-
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25 care Prescription Drug, Improvement, and Modernization
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1 Act of 2003 (Public Law 108173), and any other provi-
2 sion of law providing any patent right or exclusive mar-
3 keting period for any drug, biological product, or manufac-
4 turing process for a drug or biological product (such as
5 pediatric extensions under section 505A of the Federal
6 Food, Drug, and Cosmetic Act (21 U.S.C. 355a) or or-
7 phan drug marketing exclusivity under subchapter B of
8 chapter V of such Act (21 U.S.C. 360aa et seq.)), no per-
9 son shall have the right to exclusively manufacture, dis-
10 tribute, sell, or use a drug, a biological product, or a man-
11 ufacturing process for a drug or biological product in
12 interstate commerce, including the exclusive right to rely
13 on health registration data or the 30-month stay-of-effec-
14 tiveness period for Orange Book patents under section
15 505(j) of such Act (21 U.S.C. 355(j)).
16 (b) REMUNERATION.--A person that is eligible for
17 prize payments from the Fund as provided for in section
18 10 shall receive such payments--
19 (1) in lieu of any remuneration the person
20 would have otherwise received for the exclusive mar-
21 keting, distribution, sale, or use of a drug, biological
22 product, or manufacturing process for a drug or bio-
23 logical product but for the application of subsection
24 (a); and
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1 (2) in addition to any other remuneration that
2 such person receives by reason of the nonexclusive
3 marketing, distribution, sale, or use of the drug, bio-
4 logical product, or manufacturing process for a drug
5 or biological product.
6 (c) APPLICATION.--This section shall apply only with
7 respect to the marketing, distribution, sale, or use of a
8 drug, a biological product, or a manufacturing process for
9 a drug or biological product that occurs on or after Octo-
10 ber 1, 2007.
11 SEC. 6. FUND FOR MEDICAL INNOVATION PRIZES.
12 (a) ESTABLISHMENT.--There is hereby established in
13 the Treasury of the United States a revolving fund to be
14 known as the ``Fund for Medical Innovation Prizes'',
15 which shall consist of amounts appropriated to the Fund
16 and amounts credited to the Fund under subsection (c).
17 (b) AVAILABILITY OF FUNDS.--Amounts in the Fund
18 shall be available to the Board, subject to section 16(b),
19 for the purpose of carrying out this Act.
20 (c) AMOUNTS CREDITED TO THE FUND.--The Sec-
21 retary of the Treasury shall credit to the Fund the interest
22 on, and the proceeds from sale or redemption of, obliga-
23 tions held in the Fund.
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1 SEC. 7. BOARD OF TRUSTEES FOR THE FUND.
2 (a) ESTABLISHMENT.--There is hereby established
3 (as a permanent, independent establishment in the execu-
4 tive branch) a Board of Trustees for the Fund for Medical
5 Innovation Prizes.
6 (b) MEMBERSHIP.--The Board shall be composed of
7 13 members, including--
8 (1) the Administrator of the Centers for Medi-
9 care & Medicaid Services;
10 (2) the Commissioner of Food and Drugs;
11 (3) the Director of the National Institutes of
12 Health;
13 (4) the Director of the Centers for Disease
14 Control and Prevention; and
15 (5) nine individuals to be appointed by the
16 President, with the advice and consent of the Sen-
17 ate, of which--
18 (A) three representatives of the business
19 sector;
20 (B) three representatives of the private
21 medical research and development sector, in-
22 cluding at least one representative of the non-
23 profit private medical research and development
24 sector; and
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25 (C) three representatives of consumer and
26 patient interests, including at least one rep-
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1 resentative of patients suffering from orphan
2 diseases.
3 (c) TERMS.--
4 (1) IN GENERAL.--Except as provided in para-
5 graph (2), each member appointed to the Board
6 under subsection (a)(5) shall be appointed for a
7 term of 4 years.
8 (2) TERMS OF INITIAL APPOINTEES.--As des-
9 ignated by the President at the time of appointment,
10 of the members first appointed to the Board under
11 subsection (a)(5)--
12 (A) 5 members shall be appointed for a
13 term of 4 years; and
14 (B) 4 members shall be appointed for a
15 term of 2 years.
16 (d) VACANCIES.--Any member of the Board ap-
17 pointed to fill a vacancy occurring before the expiration
18 of the term for which the member's predecessor was ap-
19 pointed shall be appointed only for the remainder of that
20 term. A member of the Board may serve after the expira-
21 tion of that member's term until a successor has taken
22 office.
23 (e) COMPENSATION AND TRAVEL EXPENSES.--
24 (1) COMPENSATION.--Members of the Board
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25 shall each be paid not less than the daily equivalent
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1 of level IV of the Executive Schedule for each day
2 (including travel time) during which they are en-
3 gaged in the actual performance of the duties of the
4 Board.
5 (2) TRAVEL EXPENSES.--Each member of the
6 Board shall receive travel expenses, including per
7 diem in lieu of subsistence, in accordance with appli-
8 cable provisions under subchapter I of chapter 57 of
9 title 5, United States Code.
10 (f) CHAIRPERSON; OFFICERS.--The members of the
11 Board shall elect a Chairperson and any other officers of
12 the Board. The Chairperson and any such officers shall
13 be elected for a term of 2 years.
14 (g) STAFF.--The Board may appoint and fix the pay
15 of such additional personnel as the Board considers appro-
16 priate. The staff of the Board shall be appointed subject
17 to the provisions of title 5, United States Code, governing
18 appointments in the competitive service, and shall be paid
19 in accordance with the provisions of chapter 51 and sub-
20 chapter III of chapter 53 of such title relating to classi-
21 fication and General Schedule pay rates.
22 (h) EXPERTS AND CONSULTANTS.--The Board may
23 procure temporary and intermittent services under section
24 3109(b) of title 5, United State Code.
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1 SEC. 8. POWERS AND DUTIES OF THE BOARD.
2 (a) DUTIES.--The Board shall--
3 (1) award prize payments for medical innova-
4 tion in accordance with this Act; and
5 (2) submit a report to the Congress under sec-
6 tion 14.
7 (b) POWERS OF BOARD.--
8 (1) HEARINGS AND SESSIONS.--
9 (A) IN GENERAL.--The Board may, for
10 the purpose of carrying out this Act, hold hear-
11 ings, sit and act at times and places, take testi-
12 mony, and receive evidence as the Board con-
13 siders appropriate.
14 (B) FIRST MEETING.--Not later than 30
15 days after the initial members of the Board are
16 appointed under section 7(b)(5) and confirmed,
17 the Board shall conduct its first meeting.
18 (2) POLICIES AND PROCEDURES.--
19 (A) IN GENERAL.--Not later than 1 year
20 after the initial members of the Board are ap-
21 pointed under section 7(b)(5) and confirmed,
22 the Board shall establish such policies and pro-
23 cedures as may be appropriate to carry out this
24 Act.
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25 (B) MAJORITY VOTE.--The policies and
26 procedures of the Board shall require that any
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1 determination of the Board be made by not less
2 than a majority vote of the members of the
3 Board.
4 (C) ADMINISTRATIVE PROCEDURES.--The
5 policies and procedures of the Board shall com-
6 ply with subchapter II of chapter 5 of title 5,
7 United States Code.
8 (D) TRANSPARENCY.--The policies and
9 procedures of the Board shall--
10 (i) comply with sections 552 and 552b
11 of title 5, United States Code (commonly
12 referred to as the ``Freedom of Informa-
13 tion Act'' and the ``Government in the
14 Sunshine Act'', respectively); and
15 (ii) ensure that the proceedings and
16 deliberations of the Board are transparent
17 and are supported by a description of the
18 methods, data sources, assumptions, out-
19 comes, and related information that will
20 allow the public to understand how the
21 Board reaches its criteria-setting and
22 award decisions.
23 (3) EXPERT ADVISORY COMMITTEES.--To as-
24 sist the Board in carrying out this Act, the Board
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1 shall establish independent expert advisory commit-
2 tees, including committees on the following:
3 (A) Economic evaluation of therapeutic
4 benefits.
5 (B) Business models and incentive struc-
6 tures for innovation.
7 (C) Research and development priorities.
8 (D) Orphan diseases.
9 (E) Financial control and auditing.
10 (4) POWERS OF MEMBERS AND AGENTS.--Any
11 member or agent of the Board may, if authorized by
12 the Board, take any action which the Board is au-
13 thorized to take under this Act.
14 (5) MAILS.--The Board may use the United
15 States mails in the same manner and under the
16 same conditions as other departments and agencies
17 of the United States.
18 SEC. 9. PRIZE PAYMENTS FOR MEDICAL INNOVATION.
19 (a) AWARD.--For fiscal year 2008, and each subse-
20 quent fiscal year, the Board shall award to persons de-
21 scribed in subsection (b) prize payments for medical inno-
22 vation relating to a drug, a biological product, or a new
23 manufacturing process for a drug or biological product.
24 (b) ELIGIBILITY.--To be eligible to receive a prize
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25 payment under subsection (a) for medical innovation relat-
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1 ing to a drug, a biological product, or a manufacturing
2 process, a person shall be--
3 (1) in the case of a drug or biological product,
4 the first person to receive market clearance with re-
5 spect to the drug or biological product; or
6 (2) in the case of a manufacturing process, the
7 holder of the patent with respect to such process.
8 (c) CRITERIA.--The Board shall, by regulation, es-
9 tablish criteria for the selection of recipients, and for de-
10 termining the amount, of prize payments under this sec-
11 tion. Such criteria shall include consideration of the fol-
12 lowing:
13 (1) The number of patients who would benefit
14 from the drug, biological product, or manufacturing
15 process involved, including (in cases of global ne-
16 glected diseases, global infectious diseases, and other
17 global public health priorities) the number of non-
18 United States patients.
19 (2) The incremental therapeutic benefit of the
20 drug, biological product, or manufacturing process
21 involved as compared to existing drugs, biological
22 products, and manufacturing processes available to
23 treat the same disease or condition, except that the
24 Board shall provide for cases where drugs, biological
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25 products, or manufacturing processes are developed
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1 at roughly the same time, so that the comparison is
2 to products that were not recently developed.
3 (3) The degree to which the drug, biological
4 product, or manufacturing process involved address-
5 es priority health care needs, including--
6 (A) current and emerging global infectious
7 diseases;
8 (B) severe illnesses with small client popu-
9 lations (such as indications for which orphan
10 designation has been granted under section 526
11 of the Federal Food, Drug, and Cosmetic Act
12 (21 U.S.C. 360bb)); and
13 (C) neglected diseases that primarily afflict
14 the poor in developing countries.
15 (4) Improved efficiency of manufacturing proc-
16 esses for drugs or biological processes.
17 (d) REQUIREMENTS.--In awarding prize payments
18 under this section, the Board shall comply with the fol-
19 lowing:
20 (1) In cases where a new drug, biological prod-
21 uct, or manufacturing process offers an improve-
22 ment over an existing drug, biological product, or
23 manufacturing process and the new drug, biological
24 product, or manufacturing process competes with or
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25 replaces the existing drug, biological product, or
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1 manufacturing process, the Board shall continue to
2 make prize payments for the existing drug, biological
3 product, or manufacturing process to the degree that
4 the new drug, biological product, or manufacturing
5 process was based on or benefitted from the develop-
6 ment of the existing drug, biological product, or
7 manufacturing process.
8 (2) The Board may not make prize payments
9 based on the identity of the person who manufac-
10 tures, distributes, sells, or uses the drug, biological
11 product, or manufacturing process involved.
12 (3) The Board may award prize payments for
13 a drug, a biological product, or a manufacturing
14 process for not more than 10 fiscal years, regardless
15 of the term of any related patents.
16 (4) For any fiscal year, the Board may not
17 award a prize payment for any single drug, biologi-
18 cal product, or manufacturing process in an amount
19 that exceeds 5 percent of the total amount appro-
20 priated to the Fund for that year.
21 (5) For every drug or biological product that
22 receives market clearance, the Board shall determine
23 whether and in what amount to award a prize pay-
24 ment for the drug or biological product not later
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25 than the end of the fourth full calendar-year quarter
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