The Clinical Trial Modernization Act aims to broaden participation in clinical trials by removing financial and logistical barriers for underrepresented populations. It directs HHS to fund community outreach and investigator training, amends federal anti-kickback and civil monetary penalty law to permit sponsor-paid trial expenses and necessary digital health technologies, establishes conditions under which sponsor payments of patient cost-sharing are not actionable under federal fraud statutes, and creates a limited tax exclusion for participant payments.
For sponsors, community sites, and compliance teams, the bill offers explicit statutory pathways to reimburse travel, meals, transportation and to provide devices or software needed for participation — while setting guardrails intended to limit undue influence and protect Federal health programs. It also ties the definition of "underrepresented population" to NIH and FDA guidance, signals priorities for multilingual and tribal outreach, and leaves several implementation and enforcement questions for regulators and program administrators to resolve.
At a Glance
What It Does
Authorizes HHS grants for community outreach and investigator training; amends 42 U.S.C. 1320a–7a and 1320a–7b to permit remuneration for trial-related expenses and provision of digital health technologies when necessary to facilitate participation by underrepresented populations; creates statutory protection for sponsor payment of patient cost-sharing under specified conditions; and adds a new Internal Revenue Code exclusion (up to $2,000) for participant payments from approved clinical trials.
Who It Affects
Drug and device sponsors, contract research organizations, community clinical trial sites (including rural clinics and tribal facilities), institutional review boards and investigators, federal payers (Medicare/Medicaid), and prospective trial participants from underrepresented communities.
Why It Matters
The bill lowers legal uncertainty that has constrained sponsors from covering participation expenses and deploying remote technologies, potentially reshaping recruitment strategies and trial design to reach broader, more diverse populations while imposing new compliance requirements on sponsors and oversight responsibilities on HHS and CMS.
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What This Bill Actually Does
The bill starts by defining “underrepresented population” by reference to the NIH toolkit (April 1, 2024) and the FDA’s recognized groups. That cross-reference anchors the Act to existing federal guidance so outreach and eligibility efforts target the same populations regulators consider underserved.
Section 3 directs the HHS Secretary to fund grants and contracts for community education, recruitment, and training aimed at increasing enrollment among those populations. HHS must prioritize applicants producing multilingual materials and those working in communities traditionally underrepresented in trials, such as tribal areas.
The appropriation language covers fiscal years 2025 and 2026 and leaves the funding level discretionary.Section 4 amends two key federal fraud provisions. It modifies the Civil Monetary Penalties Law’s anti-remuneration exception and the Anti‑Kickback statute to carve out sponsor payments for trial-related expenses (travel, transportation, meals) and the free provision of digital health technologies when those technologies are necessary to enable participation by underrepresented patients.
The statutory language requires that such remuneration be made available to all study participants and be aimed at facilitating inclusion across demographics and geographies. These amendments take effect on enactment.Section 5 provides a conditional safe harbor from CMP, Anti‑Kickback, and False Claims Act exposure for sponsor payments of patient cost-sharing (for trials or trials requiring a diversity action plan under the FDCA), but only if several requirements are met: payments must be consistent with federal coverage rules (including Medicare trial coverage criteria), must be a reasonable means of facilitating enrollment or reducing attrition among underrepresented subjects, be available for the full trial duration, not contingent on future purchase of a product, not exceed a patient’s program cost-share, require the patient to decline other assistance, include oversight through IRBs and written investigator agreements, cap total enrollment, and generally avoid advertising the subsidy.
These provisions leave operational questions — for example, how CMS’s trial coverage rules interact with sponsor-funded cost-sharing and which enrollment caps are appropriate — to regulators and sponsors to sort out.Finally, Section 6 adds a new Internal Revenue Code section excluding up to $2,000 of payments a participant receives from an approved clinical trial from gross income, effective for taxable years after enactment. Section 7 clarifies that the Act does not narrow other statutory or regulatory protections or defenses that might apply to practices encouraging trial participation.
The Five Things You Need to Know
The bill ties “underrepresented population” to the NIH Patient-Focused Therapy Development toolkit (Apr. 1, 2024) and FDA-recognized groups, making federal guidance the definitional baseline.
HHS may award grants (FY2025–FY2026 discretionary sums) to support community outreach, multilingual materials, investigator training at community sites, and partnerships with community-based organizations.
Amendments to 42 U.S.C. 1320a–7a and 1320a–7b carve out sponsor-funded trial expenses (travel, transportation, meals) and the free provision of required digital health technologies when intended to facilitate inclusion of underrepresented populations.
Sponsor payments of patient cost-sharing will not trigger CMP, Anti‑Kickback, or False Claims Act liability if strict conditions are met: consistency with federal coverage rules, reasonableness for facilitating underrepresented enrollment, availability for the trial’s duration, noncontingency on purchase, caps on enrollment, oversight by IRBs, and other safeguards.
The bill creates a new tax exclusion (Internal Revenue Code Sec. 139J) excluding up to $2,000 per taxable year of payments to participants from approved clinical trials.
Section-by-Section Breakdown
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Definition of underrepresented populations
This section imports the NIH definition used in its Patient-Focused Therapy Development toolkit (April 1, 2024) and adds FDA-recognized groups. That linkage matters because it directs sponsors and grant applicants to operational guidance already in circulation rather than creating a novel statutory list, but it also means changes to NIH or FDA guidance will affect how this Act’s protections are applied.
HHS grants for outreach, training, and community partnerships
The Secretary may award grants and contracts to entities that provide community education, recruit diverse participants, and train investigators at community sites (including rural and tribal sites). The statute prioritizes applicants that produce multilingual materials or target traditionally underrepresented communities. Appropriations are authorized for FY2025–FY2026 on an as‑needed basis, leaving HHS discretion over funding levels and selection criteria.
Statutory carve-outs for expenses and digital health technologies
This provision amends the Civil Monetary Penalties Law and the Anti‑Kickback Statute to expressly allow sponsor remuneration for trial-related expenses and the free provision of digital health technologies when those technologies are necessary to enable participation by underrepresented patients. The statutory text requires that remuneration be available to all study participants and aimed at facilitating inclusion across demographics, which is designed to limit selective inducements but raises operational questions about documentation and equal access.
Conditions protecting sponsor payment of patient cost-sharing
Section 5 creates a conditional protection from CMP, Anti‑Kickback, and False Claims Act liability for sponsor-funded cost-sharing, provided a set of safeguards are satisfied: alignment with federal coverage rules (including CMS trial coverage criteria), demonstrable reasonableness as a means to increase underrepresented enrollment or reduce attrition, continuous availability for the trial’s length, no linkage to future purchases, limits so payments do not exceed program cost-share, patient agreement not to accept other assistance, written investigator agreements, IRB oversight, and an enrollment cap. Those safeguards are regulatory choke points where CMS, HHS, and enforcement agencies will focus compliance efforts.
Tax exclusion for participant payments
The bill inserts a new Code section (139J) excluding from gross income payments to individuals for participation in an approved clinical trial, capped at $2,000 per taxable year. This provides a modest tax incentive for participants but imposes a clear dollar limit that could influence how sponsors structure reimbursements.
Rule of construction preserving other protections
Section 7 states the Act does not narrow existing statutory, regulatory, or guidance-based protections from liability under the Anti‑Kickback statute, CMP law, or False Claims Act. In practice, this preserves other defenses and safe harbors and signals that regulators retain discretion to interpret and enforce existing rules alongside the new provisions.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Underrepresented patients (including rural and tribal populations): They gain access to sponsor-funded travel, meals, transportation, digital health tools, and potential sponsor coverage of cost-sharing, reducing financial and logistical barriers to trial participation.
- Community clinical sites and investigators: Grants fund outreach and training, which can build local trial capacity, increase investigator diversity, and create pipelines for future studies.
- Drug and device sponsors and CROs: The statute reduces legal uncertainty about paying participant expenses and providing necessary digital tools, enabling more proactive recruitment strategies and decentralized trial models.
- Researchers designing diversity plans: Clear statutory language aligns incentives for including diversity action plans tied to trials and offers a framework for operationalizing those plans.
Who Bears the Cost
- Drug and device sponsors: They will incur direct costs for reimbursing expenses, supplying digital technologies, and funding patient cost-sharing under the Act’s safeguards, plus increased compliance and recordkeeping costs.
- HHS and CMS: Agencies must develop implementing regulations, oversee grants and safe-harbor compliance, and coordinate coverage determinations — imposing administrative and enforcement burdens on federal programs.
- Institutional Review Boards and trial investigators: Increased oversight duties and documentation requirements (written agreements, informed consent disclosures, and monitoring) will add operational work for IRBs and site staff.
- Taxpayers: Discretionary appropriations for the grants and any expanded federal oversight carry fiscal implications borne by federal budgets.
Key Issues
The Core Tension
The central dilemma is balancing two legitimate objectives — removing financial and logistical barriers to diversify trial participation, and preventing sponsor payments from becoming improper inducements — while relying on statutory carve-outs plus procedural safeguards that shift much of the fine‑grained judgment to regulators and sponsors.
The bill intentionally loosens statutory constraints on sponsor-funded trial expenses while adding procedural safeguards, but it leaves significant implementation choices to regulators. Key open questions include how strictly CMS will interpret “consistent with all applicable coverage rules” for Medicare and Medicaid trial coverage when sponsors also provide cost-sharing assistance, and how regulators will monitor that payments are genuinely aimed at inclusion rather than as recruitment inducements.
The requirement that remuneration be “made available to all study participants” is meant to blunt selective inducements, but it can complicate targeted outreach: programs designed to overcome barriers specific to a subgroup (for example, providing devices only to participants in remote areas) may need robust documentation to show parity of access or justification under the statute.
Operational complexity is another tension. Sponsors will need processes to track payments, enforce patient agreements not to accept other assistance, cap enrollments, and document IRB oversight — all while coordinating with multiple payers.
The $2,000 annual tax exclusion helps participants but is modest compared with some travel or technology costs and may lead sponsors to split reimbursements across categories to fit within tax limits. The provision allowing digital health technologies raises data privacy, security, and interoperability concerns that the bill does not address; deploying devices or apps necessary for participation can implicate HIPAA, state privacy laws, and device regulation without clear statutory direction here.
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