[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1764 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1764

 To provide incentives to increase research by commercial, for-profit 
 entities to develop vaccines, microbicides, diagnostic technologies, 
   and other drugs to prevent and treat illnesses associated with a 
                 biological or chemical weapons attack.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            December 4, 2001

 Mr. Lieberman introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide incentives to increase research by commercial, for-profit 
 entities to develop vaccines, microbicides, diagnostic technologies, 
   and other drugs to prevent and treat illnesses associated with a 
                 biological or chemical weapons attack.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Robert Stevens, 
Thomas Morris Jr., Joseph Curseen, Kathy Nguyen, Ottilie Lundgren, and 
Lisa J. Raines Biological and Chemical Weapons Research Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
Sec. 4. Biological and chemical agent research priority list.
Sec. 5. Research registration requirements.
Sec. 6. Federal tax incentives.
Sec. 7. Bioterrorism Countermeasure Purchase Fund.
Sec. 8. Patent term protection.
Sec. 9. Liability and indemnification.
Sec. 10. Construction of biosafety research facilities.
Sec. 11. National Institutes of Health countermeasures partnership 
                            challenge grants.
Sec. 12. Expanded human clinical trials qualifying for orphan drug 
                            credit.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The United States must be prepared with diagnostic and 
        medical countermeasures in the event of the use of biological 
        and chemical weapons by terrorists and others against both 
        military personnel and civilians.
            (2) The threat of biological and chemical weapons is real.
                    (A) Members of the cult Aum Shinrikyo were 
                responsible for chemical weapons attacks in Japan that 
                killed 12 people and injured over 5,000 on March 20, 
                1995. In this attack, terrorists placed plastic bags of 
                diluted sarin, a lethal nerve agent, on crowded subway 
                trains during the morning rush-hour. It was found that 
                sect members had legally stockpiled sodium cyanide and 
                hundreds of tons of chemicals used to make sarin, 
                including sodium fluoride, phosphorous trichloride, 
                isopropyl alcohol, and acetonitrile. Aum Shinrikyo 
                concealed its sarin manufacturing plant in a shrine to 
                a sect goddess. Investigators also found a biological 
                weapons research lab on the cult's compound. The 
                facility contained an incubator, an electron 
                microscope, a growth medium for fermenting or growing 
                cultures, and cultures of the deadly botulinum toxin. 
                Aum Shinrikyo members were apparently planning a more 
                devastating offensive. The cult also released anthrax 
                spores and botulinum in Tokyo nine times before it 
                carried out its nerve gas attack. Aum's attempted germ 
                attacks failed because the group's biologists cultured 
                the strain of anthrax used to make vaccine, which is 
                harmless. Had they used a potent culture, the outcome 
                might have been very different. No one knows why the 
                botulism attack failed. The horror is only magnified by 
                the thought that individuals and nations would consider 
                attacking others with such viruses. In October 1992, 
                Shoko Asahara, head of the Aum Shinrikyo cult, and 40 
                followers traveled to Zaire, ostensibly to help treat 
                Ebola victims. But the group's real intention, 
                according to an October 31, 1995, report by the 
                Permanent Subcommittee on Investigations of the Senate, 
                was probably to obtain virus samples, culture them and 
                use them in biological attacks.
                    (B) Before the 2001 anthrax attacks, the only 
                recent successful biological attack in the United 
                States, which was not recognized as such at the time, 
                was with salmonella. Followers of Bhagwan Shree 
                Rajneesh put the bacteria in salad bars in restaurants 
                in Dalles, Oregon, in 1984, sickening 750 people.
                    (C) There is a long and sordid history of chemical 
                and biological weapons, including use during the First 
                and Second World Wars, an accidental release of anthrax 
                spores in 1979 from a Soviet military microbiological 
                facility, use of mustard gas, tabun, and hydrogen 
                cyanide by Iraq in the Iran-Iraq War and against the 
                Kurds, and development by Iraq of an offensive 
                biological weapons capability including anthrax and 
                botulium toxin.
                    (D) A Central Intelligence Agency report concluded 
                that ``clandestine production of chemical and 
                biological weapons for multiple casualty attacks raises 
                no greater technical obstacles than does the 
                clandestine production of chemical narcotics or 
                heroin''. One of the aspects which makes chemical and 
                biological agents such an attractive weapon for a 
                terrorist is the high shock value of these weapons.
                    (E) The Office of Technology Assessment estimated 
                than 100 kilograms of anthrax released upwind in an 
                American city could cause between 130,000 and 3,000,000 
                deaths, depending on the weather and other variables. 
                This degree of carnage is in the same range as that 
                forecast for a hydrogen bomb.
            (3) The United States must take steps to prevent access to 
        the biological or chemical agents by terrorists and others, but 
        attacks may nonetheless occur. The United States needs to 
        respond to attacks with well-coordinated public health 
        measures. We also need a broad array of effective diagnostics 
        and medicines to treat those who are exposed to, or infected 
        by, the agents.
            (4) The United States faces a public health crisis with the 
        spread of antibiotic resistant bacteria. This alone should lead 
        us to take urgent action to develop new medicines. The 
antibiotic vancomycin, our last line of defense against the often 
deadly bacterium, Staphylococcus aureus, is losing its effectiveness. 
Worldwide, many strains of S. aureus are already resistant to all 
antibiotics except vancomycin. Emergence of strains lacking sensitivity 
to vancomycin signifies that variants untreatable by every known 
antibiotic are on their way. S. aureus, a major cause of hospital-
acquired infections, has thus moved one step closer to becoming an 
unstoppable killer. What is more, strains of at least three bacterial 
species capable of causing life-threatening illnesses (Enterococcus 
faecalis, Mycobacleriumn tuberculosis and Pseudomonas aeruginosa) 
already evade every antibiotic in the clinician's armamentarium, a 
stockpile of more than 100 drugs. In part because of the rise in 
resistance to antibiotics, the death rates for some communicable 
diseases (such as tuberculosis) have started to rise again, after 
having declined in the industrial nations.
            (5) The possibility exists that terrorists or others will 
        use biotechnology techniques to enhance the lethality of a 
        biological agent.
            (6) Vaccines exist for some of the biological agents that 
        might be used by terrorists and others. The current United 
        States vaccine against anthrax was formulated in the 1960s and 
        licensed in 1970, 2 years before efficacy data were required 
        for licensing. Three problems with this vaccine have stimulated 
        interest in an improved human anthrax vaccine:
                    (A) The immunization schedule involves six initial 
                doses over 18 months followed by yearly boosters.
                    (B) Immunity is not protective against all natural 
                anthrax strains in guinea pigs.
                    (C) There is a high incidence of local reactions 
                (30 percent according to the package insert).
        The vaccine is an undefined mix of bacterial products. 
        Furthermore, the potency of both the UK and MDPH-PA vaccines is 
        found to vary significantly between lots. Some are concerned 
        that the vaccine might lead to chronic fatigue syndrome, 
        fibromyalgia, multiple chemical sensitivity, autoimmune 
        illnesses, or neuropathies. There is no vaccine against plague 
        or most of the other bacteria and viruses that might be used as 
        biological weapons.
            (7) Treatments for those who are not protected by vaccines 
        are often not effective. Inhalation anthrax (woolsorters' 
        disease) results from inhaling anthrax spores and, if 
        untreated, it is about 90 percent fatal. Antibiotics and 
        standard interventions provided after symptoms have developed 
        rarely prevent a fatal outcome.
            (8) Vaccines and treatments for exposure to nerve toxins do 
        not exist or are ineffective.
            (9) The United States Government is directly funding 
        biomedical research on vaccines and treatments for biological 
        and chemical agents. These funding efforts could be matched 
        many-fold if the 1,300 biotechnology companies were able to 
        secure the funding from private investors to conduct this 
        research. Most biotechnology companies are early stage research 
        ventures with no revenue from product sales to finance their 
        medical research. Most biotechnology companies must rely on 
        repeated and large infusions of investor capital to fund this 
        research. To conduct research on countermeasures to biological 
        agents and other toxins or any other type of research, these 
        companies must persuade venture capitalists and other investors 
        that funding this research may lead to a rate of return 
        commensurate with the risk and comparable to the rate of return 
        available to other investment opportunities.
            (10) Biotechnology companies are justifiably reluctant to 
        modify their ongoing research priorities and devote scare 
        management and scientific talent to new and risky projects. 
        Their first priority and obligation is and must be to secure 
        approval to market a product that will generate revenue 
        sufficient to reduce the dependence of the company on continued 
        infusions of investor capital and to provide a long-awaited 
        return to patient investors.
            (11) Biotechnology companies tend to focus on breakthrough 
        research to develop medical treatments for diseases where no 
        effective treatments are currently available. They often 
        specialize in research and development on rare diseases and 
        they are parties in the vast majority of the collaborations in 
        the United States between private industry and academic medical 
        centers and the National Institutes of Health. Many 
        biotechnology companies do not have approval to market products 
        with respect to which they might develop minor improvements to 
        maintain a market advantage.
            (12) Successful research and development of countermeasures 
        will necessitate breakthroughs in virology, immunology, 
        antibiotics, genetic analysis, and many other disciplines in 
        biology. There is no established market or appropriate Food and 
        Drug Administration approval process for most countermeasures. 
        Biotechnology companies and their investors are sensitive to 
        any possibility that successful completion of breakthrough 
        research leading to the approval for the sale of a product, 
        including a countermeasure, will lead to challenges to their 
        prices and patents. They are especially sensitive to the terms 
        of sales that may arise when the only market for a product is 
        the Federal Government. These are risks that companies, 
        employees and investors in other sectors of the economy do not 
        face and that may affect the willingness of investors and 
        capital markets to fund this critical medical research.
            (13) The enactment of tax, patent, liability and other 
        incentives will enable the biotechnology industry to raise 
        equity and other capital from investors to fund research on 
        countermeasures for biological and chemical attacks. This will 
        supplement direct Federal funding for this research and speed 
        development of life saving technologies. The existence of these 
technologies will reassure the public that if attacks occur, effective 
medical treatments are available and there is no reason for panic.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Countermeasures.--The term ``countermeasures'' means a 
        vaccine, microbicide, diagnostic technology, drug, or other 
        technology that can be used to diagnose, treat, or prevent 
        infection with, or the spread of, a biological agent or toxin 
        on the list described in section 4, or a research tool used to 
        develop such countermeasure, and that has been approved for use 
        in accordance with applicable provisions of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) and the Public 
        Health Service Act (42 U.S.C. 201 et seq.).
            (2) Director.--The term ``Director'', except as provided in 
        section 6, means the Director of the Office of Homeland 
        Security.
            (3) Office.--The term ``Office'' means the Office of 
        Homeland Security.

SEC. 4. BIOLOGICAL AND CHEMICAL AGENT RESEARCH PRIORITY LIST.

    (a) Development.--Not later than 90 days after the date of 
enactment of this Act, the Director, in consultation with the Secretary 
of Defense and the Secretary of Health and Human Services, shall 
develop and publish in the Federal Register, or otherwise make 
available to holders of approved applications or other potential 
manufacturers of bioterrorism countermeasures, a list of biological and 
chemical agents and toxins that may be used as weapons of mass 
destruction. In determining which agents or toxins to place on the 
list, the Director shall consider whether the agent or toxin poses a 
significant security or medical threat to the United States military 
and intelligence personnel or civilians and whether countermeasures are 
more likely to be developed with the availability of the tax, purchase, 
patent, or liability provisions of this Act.
    (b) Initial List.--The initial list published under subsection (a) 
may, at the discretion of the Director, contain the following 
biological and chemical agents and toxins:
            (1) Variola major confluent pox, flat pox, and hemorrhagic 
        smallpox.
            (2) Bacillus anthracis (anthrax).
            (3) Clostridium botulinum toxin (botulism).
            (4) Francisella tularensis (tularaemia).
            (5) Ebola hemorrhagic fever.
            (6) Marbug hemorrhagic fever.
            (7) Lassa fever.
            (8) Julin (Argentine hemmorrhagic fever).
            (9) Crimean-Congo Hemmorrhagic Fever.
            (10) Coxiella burnetti (Q fever).
            (11) Brucella species (brucellosis).
            (12) Burkholderia mallei (glanders).
            (13) Venezuelan encephalomyelitis.
            (14) Eastern and Western equine encephalomyelitis.
            (15) Ricin toxin from ricinus commuinis (castor beans).
            (16) Epsilon toxin of colostridium perfringens.
            (17) Staphylococcus enterotoxin B.
            (18) Salmonella species.
            (19) Shigella dysenteriae.
            (20) Escherichia coli 0157:H7.
            (21) Vibrio cholerae (colera).
            (22) Cryptosporidium parvum.
            (23) Nipah virus.
            (24) Hantaviruses.
            (25) Tickborn homorrhagic fever viruses.
            (26) Tickborn encephalitis virus.
            (27) Yellow fever.
            (28) Malaria.
            (29) Antibiotic resistant tuberculosis.
            (30) Acquired immune deficiency syndrome (AIDS).
            (31) Entamoeba histoytica.
            (32) Bacillary dystentary.
            (33) Giardiasis.
            (34) Trichomoniasis.
            (35) Trypanosomiasis.
            (36) Leishmaniasis.
            (37) Nerve agents (including tabun, sarin, soman, GF, and 
        VX).
            (38) Blood agents (including hydrogen cyanide and cyanogen 
        chloride).
            (39) Blister agents (including lewisite, nitrogenadn and 
        sulfur mustards).
            (40) Heavy metals (including arsenic, lead, and mercury).
            (41) Colatile toxins (including benzene, chloroform, and 
        trihalomethanes).
            (42) Pulmonary agents (including phosgene and chlorine 
        vinly chloride).
            (43) Incapacitating agents (BZ).
    (c) Revisions.--The Director shall revise the list published under 
subsection (a) on at least an annual basis, and publish such revised 
list in the Federal Register, or otherwise make such list available to 
holders of approved applications or other potential manufacturers of 
bioterrorism countermeasures.
    (d) No Judicial Review.--Notwithstanding any other provision of 
law, there shall be no judicial review of the list, or revised list, 
published by the Director under this section.

SEC. 5. RESEARCH REGISTRATION REQUIREMENTS.

    (a) In General.--On or before December 31 of each year each entity 
that operates any commercial, for-profit establishment in any State 
that seeks to be eligible for the tax, procurement, intellectual 
property, and liability incentives provided for in this Act, and that 
is engaged in the conduct of research to develop countermeasures, shall 
register with the Food and Drug Administration. Such registration shall 
contain--
            (1) the name and address of the entity;
            (2) the name and address of the establishment at which the 
        research is being conducted;
            (3) the name of the agent or toxin with respect to which 
        the entity seeks to develop countermeasures;
            (4) a description of the research that is being, or that 
        will be, conducted to develop countermeasures to such agent or 
        toxin;
            (5) the name of each individual who is conducting the 
        research involved; and
            (6) any other information required under regulations 
        promulgated by the Director.
    (b) Availability of Information.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary of Health and Human 
        Services shall promulgate regulations with respect to the 
        availability of information under this subsection.
            (2) Inspections.--Subject to regulations promulgated under 
        paragraph (1), the Food and Drug Administration shall make 
        available for inspection, to any person so requesting, any 
        registration filed pursuant to subsection (a), except as 
        provided in paragraph (3).
            (3) Certain information not available.--The Director shall 
        promulgate regulations to exempt certain information from 
        disclosure under paragraph (2), including proprietary 
        commercial information of the registrant, national security 
        information, and information affecting the security of research 
        and other facilities.
    (c) Inspections.--Every establishment in any State registered with 
the Food and Drug Administration pursuant to this section shall be 
subject to inspection, limited to such information as may be necessary 
relating to the development of countermeasures and facility security, 
pursuant to regulations promulgated by the Director.
    (d) Certification.--
            (1) In general.--With respect to each entity that registers 
        with the Food and Drug Administration under this section, the 
        Director, in consultation with the Food and Drug 
        Administration, shall determine whether the research to be 
        conducted under such registration is intended to lead to the 
        development of countermeasures (other than a research tool as 
        defined in paragraph (3)).
            (2) Determination.--If the Director makes an affirmative 
        determination under paragraph (1) with respect to an entity, 
        the Director shall certify the entity as being eligible--
                    (A) for the tax incentive provisions described in 
                section 6;
                    (B) for participating in the Bioterrorism 
                Countermeasures Purchase Fund program under section 7;
                    (C) for patent extension protection under section 
                156a or 158 of title 35, United States Code, as added 
                by section 8; and
                    (D) for the liability protections provided for 
                under the amendment made by section 9.
            (3) Determinations regarding research tools.--The Director 
        may accept a registration under this section from a commercial, 
        for-profit establishment in a State, and may provide a 
        certification under this section if the Director determines 
        that the establishment intends to conduct research that is 
        designed to lead to the development of a research tool that 
        will make it possible to expeditiously develop a countermeasure 
        to an agent or toxin that is not included on the list published 
        under section 4. An establishment that is certified under this 
        paragraph shall be eligible for the tax incentive provisions 
        described in section 6.
    (e) Rule of Construction.--Nothing in this section shall be 
construed to prohibit a commercial, for-profit establishment from 
filing more than 1 registration concerning research and from obtaining 
more than 1 certification of eligibility under this section.

SEC. 6. FEDERAL TAX INCENTIVES.

    Any entity certified as eligible for any taxable year under section 
5(d) may irrevocably elect 1 of the following Federal tax incentives to 
fund research to develop countermeasures:
            (1) Limited partnership.--The entity may establish a 
        limited partnership for the certified countermeasures research, 
        but only if such entity is a qualified small business as 
        determined under section 1202(d) of the Internal Revenue Code 
        of 1986, by substituting ``$750,000,000'' for ``$50,000,000'' 
        each place that such appears. For purposes of the Internal 
        Revenue Code of 1986, section 469 of such Code shall not apply 
        with respect to a limited partnership established under this 
        paragraph.
            (2) 100-percent exclusion for gain from stock.--The entity 
        may issue a class of stock for the certified research under 
        section 1202 of the Internal Revenue Code of 1986 with the 
        following modifications:
                    (A) Increased exclusion.--Subsection (a) of section 
                1202 of such Code shall be applied by substituting 
                ``100 percent'' for ``50 percent''.
                    (B) Stock of larger businesses eligible for 
                exclusion.--Paragraph (1) of section 1202(d) of such 
                Code (defining qualified small business) shall be 
                applied by substituting ``$750,000,000'' for 
                ``$50,000,000'' each place it appears.
                    (C) Reduction in holding period.--Subsection (a) of 
                section 1202 of such Code shall be applied by 
                substituting ``3 years'' for ``5 years''.
                    (D) Nonapplication of per-issuer limitation.--
                Section 1202 of such Code shall be applied without 
                regard to subsection (b) (relating to per-issuer 
                limitations on taxpayer's eligible gain).
                    (E) Modification of working capital limitation.--
                Section 1202(e)(6) of such Code shall be applied--
                            (i) in subparagraph (B), by substituting 
                        ``5 years'' for ``2 years'', and
                            (ii) without regard to the last sentence.
                    (F) Nonapplication of minimum tax preference.--
                Section 57(a) of such Code shall be applied without 
                regard to paragraph (7).
            (3) Breakthrough research refundable credit.--
                    (A) In general.--The Internal Revenue Code of 1986 
                is amended by redesignating section 35 as section 36 
                and by inserting after section 34 the following new 
                section:

``SEC. 35. BREAKTHROUGH RESEARCH CREDIT.

    ``(a) General Rule.--There shall be allowed as a credit against the 
tax imposed by this subtitle an amount equal to the sum of a qualified 
research corporation's discounted research credits and discounted 
research NOL's.
    ``(b) Qualified Research Corporation.--
            ``(1) In general.--For the purposes of this section, the 
        term `qualified research corporation' means any domestic 
        corporation subject to tax under subchapter C of this chapter--
                    ``(A) which has not incurred regular tax liability 
                (as defined in section 55(c)) under this chapter for a 
                period of at least 3 consecutive taxable years (other 
                than short taxable years) immediately prior to the 
                commencement of the taxable year as to which any 
                election is made under this section,
                    ``(B) which has not been controlled by, or been 
                under common control (as determined under section 
                267(b)) with, a corporation which has incurred regular 
                tax liability (as so defined) under this chapter for 
                any taxable year commencing during the period described 
                in subparagraph (A),
                    ``(C) at all times during the period described in 
                subparagraph (A) has met the requirements of subsection 
                (h), and
                    ``(D) which is not the subject of any proceeding 
                under Federal or State bankruptcy or insolvency laws.
            ``(2) Special rule.--A qualified research corporation, in 
        claiming the credit provided for in this section, shall not 
        take into account any expenditures for which it is reimbursed 
        by another taxpayer, except to the extent that the reimbursing 
        taxpayer provides a certification to the qualified research 
        corporation that--
                    ``(A) the reimbursing taxpayer would be entitled to 
                take such expenditures into account in the same manner, 
                and
                    ``(B) the reimbursing taxpayer shall not take such 
                expenditures into account in claiming any credits under 
                this section.
    ``(c) Definitions.--For the purposes of this section--
            ``(1) Research credit.--The term `research credit' means 
        the sum of those portions of a qualified research corporation's 
        current year business credit and business credit carryforwards, 
        as determined under section 38(a), which are attributable to 
        the credit determined under section 41 (for increases in 
        research activities) and which are attributable to 
        countermeasures research activities.
            ``(2) Research nol.--The term `research NOL' means that 
        portion of a qualified research corporation's net operating 
        loss (as defined in section 172(c)) attributable to qualified 
        countermeasure research expenditures.
            ``(3) Discounted research credit.--The term `discounted 
        research credit' shall mean the research credit amounts subject 
        to an election under this section multiplied by 75 percent.
            ``(4) Discounted research nol.--The term `discounted 
        research NOL' shall mean the research NOL subject to an 
        election under this section multiplied by 75 percent of the 
        highest marginal tax rate in effect under section 11.
            ``(5) Ordering rule.--For purposes of determining the 
        portion of a taxpayer's net operating loss that is attributable 
        to research expenditures (within the meaning of paragraph (2)) 
        for any taxable year, research expenditures shall be considered 
        to be offset against the taxpayer's gross income on a pro rata 
basis with all other allowable expenses and charges paid or incurred in 
the taxable year.
    ``(d) Election To Relinquish Research-Related Net Operating Losses 
and Tax Credits for Cash Refunds.--
            ``(1) General rule; benefits arising in current year.--A 
        qualified research corporation may make an election under this 
        section to relinquish all of its current year research NOL's 
        and research credits in exchange for cash refunds. The 
        corporation shall make the election on its timely filed tax 
        return (including extensions) for the taxable year in which the 
        research NOL's and research credits arise.
            ``(2) Special rule; net operating loss and unused tax 
        credit carryforwards.--
                    ``(A) In general.--If a qualified research 
                corporation has unabsorbed research NOL's or research 
                credits not subject to an election under this section, 
                which arose in a previous taxable year and which the 
                qualified research corporation would be entitled to 
                carry forward to a taxable year for which it makes an 
                election under paragraph (1), then the taxpayer shall 
                designate such research NOL carryforwards and such 
                research credit carryforwards to be covered by its 
                election under this section.
                    ``(B) Limitation.--For any taxable year, the amount 
                of research NOL carryforwards and research credit 
                carryforwards to the taxable year which may be 
                designated as covered by an election under this section 
                shall be the greater of--
                            ``(i) the average of the annual amounts of 
                        the qualified research corporation's research 
                        NOL's and research credits arising in the 3 
                        taxable years ending prior to the taxable year 
                        of the election, or
                            ``(ii) 20 percent of the qualified research 
                        corporation's research NOL carryforwards and 
                        research credit carryforwards.
            ``(3) Procedures and recordkeeping by electing 
        corporation.--An election under this section may be revoked by 
        the taxpayer only with the consent of the Secretary. Qualified 
        research corporations making such an election shall provide 
        such information in connection with such election as may be 
        required by the Secretary and shall maintain records sufficient 
        to permit the Secretary to identify and to audit the specific 
        research credits and research NOL's that are subject to an 
        election under this section.
    ``(e) Extinguishment of Relinquished Tax Benefits.--
            ``(1) Deductions.--No deduction shall be allowed to a 
        qualified research corporation under the alternative minimum 
        tax provisions of section 56(a)(4) or the net operating loss 
        provisions of section 172 with respect to that portion of a net 
        operating loss for which an election under this section is in 
        effect.
            ``(2) Credits.--No credit shall be allowed to a qualified 
        research corporation under section 38(a) with respect to any 
        credit amounts determined under section 41 for which an 
        election under this section is in effect.
    ``(f) Limitation on Use of Nonrelinquished Tax Benefits by Electing 
Corporation.--A qualified research corporation which has received 
refunds pursuant to an election under this section shall not be 
entitled to utilize any carrybacks or carryforwards of net operating 
losses or tax credits (which are not subject to an election under this 
section and are otherwise available to be utilized in the taxable year) 
to reduce taxable income or to offset any tax liability for taxable 
years after the year of such election, until such corporation has paid 
tax imposed under this chapter for such taxable years in an aggregate 
amount equal to the aggregate amount of the refunds previously 
received, less any underpayment amount determined under subsection (g).
    ``(g) Credit Proceeds From Exchange of Research Credits and 
Research NOL's Must Be Used Exclusively for Research or Experimentation 
Purposes; Recapture.--
            ``(1) Recapture of credit in the event of failure to 
        increase research and experimentation activity.--If--
                    ``(A) the sum of--
                            ``(i) the credit received by a qualified 
                        research corporation from an election under 
                        this section made on its tax return for a 
                        taxable year (the election year), plus
                            ``(ii) the amount of its research or 
                        experimental expenditures (within the meaning 
                        of section 174, but prior to application of 
                        section 280C) paid or incurred during the 
                        election year, exceeds
                    ``(B) the amount of such research or experimental 
                expenditures paid or incurred by the qualified research 
                corporation during the taxable year immediately 
                following the election year,
        then the election shall be void to the extent of the excess, 
        and the excess shall be treated as an underpayment of tax 
        imposed by this chapter for the election year without regard to 
        any credit otherwise allowable under this chapter.
            ``(2) Underpayment not subject to certain penalties.--An 
        underpayment of tax determined under paragraph (1) shall not be 
        taken into account in determining any penalties or additions to 
        tax under sections 6655 and 6662.
            ``(3) Recapture penalty limited to the amount of exchange 
        election payments received.--An underpayment of tax determined 
        under paragraph (1) shall not exceed the amount taken into 
        account under paragraph (1)(A)(i).
            ``(4) Exception.--No increase in the aggregate amounts paid 
        by a qualified research corporation to a person with whom the 
        corporation has a relationship specified in section 267(b) 
        shall be taken into account in determining the amount of any 
excess under paragraph (1).
    ``(h) Additional Requirements for a Qualified Research 
Corporation.--
            ``(1) In general.--A corporation shall be considered as 
        meeting the requirements of this subsection for any taxable 
        year if during such taxable year--
                    ``(A) at least 80 percent (by value) of the assets 
                of such corporation are used by such corporation in the 
                active conduct of 1 or more qualified trades or 
                businesses,
                    ``(B) such corporation is an eligible corporation, 
                and
                    ``(C) such corporation has aggregate gross assets 
                (as defined in section 1202(d)(2)) of not more than 
                $750,000,000.
            ``(2) Special rule for certain activities.--For purposes of 
        paragraph (1), if, in connection with any future qualified 
        trade or business, a corporation is engaged in--
                    ``(A) startup activities described in section 
                195(c)(1)(A),
                    ``(B) activities resulting in the payment or 
                incurring of expenditures which may be treated as 
                research and experimental expenditures under section 
                174, or
                    ``(C) activities with respect to in-house research 
                expenses described in section 41(b)(4),
        assets used in such activities shall be treated as used in the 
        active conduct of a qualified trade or business. Any 
        determination under this paragraph shall be made without regard 
        to whether a corporation has any gross income from such 
        activities at the time of the determination.
            ``(3) Qualified trade or business.--For purposes of this 
        subsection, the term `qualified trade or business' means any 
        trade or business other than--
                    ``(A) any trade or business involving the 
                performance of services in the fields of health, law, 
                engineering, architecture, accounting, actuarial 
                science, performing arts, consulting, athletics, 
                financial services, brokerage services, or any trade or 
                business where the principal asset of such trade or 
                business is the reputation or skill of 1 or more of its 
                employees,
                    ``(B) any banking, insurance, financing, leasing, 
                investing, or similar business,
                    ``(C) any farming business (including the business 
                of raising or harvesting trees),
                    ``(D) any business involving the production or 
                extraction of products of a character with respect to 
                which a deduction is allowable under section 613 or 
                613A, and
                    ``(E) any business of operating a hotel, motel, 
                restaurant, or similar business.
            ``(4) Eligible corporation.--For purposes of this 
        subsection, the term `eligible corporation' means any domestic 
        corporation, except that such term shall not include--
                    ``(A) a DISC or former DISC,
                    ``(B) a corporation with respect to which an 
                election under section 936 is in effect or which has a 
                direct or indirect subsidiary with respect to which 
                such an election is in effect,
                    ``(C) a FSC (as defined in section 922, as in 
                effect on the day before the date of the enactment of 
                the FSC Repeal and Extraterritorial Income Exclusion 
                Act of 2000),
                    ``(D) a regulated investment company, real estate 
                investment trust, REMIC, or FASIT, or
                    ``(E) a cooperative.
            ``(5) Stock in other corporations.--
                    ``(A) Look-thru in case of subsidiaries.--For 
                purposes of this subsection, stock and debt in any 
                subsidiary corporation shall be disregarded and the 
                parent corporation shall be deemed to own its ratable 
                share of the subsidiary's assets, and to conduct its 
                ratable share of the subsidiary's activities.
                    ``(B) Portfolio stock or securities.--A corporation 
                shall be treated as failing to meet the requirements of 
                paragraph (1) for any period during which more than 10 
                percent of the value of its assets (in excess of 
                liabilities) consist of stock or securities in other 
                corporations which are not subsidiaries of such 
                corporation (other than assets described in paragraph 
                (7)).
                    ``(C) Subsidiary.--For purposes of this paragraph, 
                a corporation shall be considered a subsidiary if the 
                parent owns more than 50 percent of the combined voting 
                power of all classes of stock entitled to vote, or more 
                than 50 percent in value of all outstanding stock, of 
                such corporation.
            ``(6) Working capital.--For purposes of paragraph (2)(A), 
        any assets which--
                    ``(A) are held as a part of the reasonably required 
                working capital needs of a qualified trade or business 
                of the corporation, or
                    ``(B) are held for investment and are reasonably 
                expected to be used within 5 years to finance research 
                and experimentation in a qualified trade or business or 
                increases in working capital needs of a qualified trade 
                or business,
        shall be treated as used in the active conduct of a qualified 
        trade or business. For periods after the corporation has been 
        in existence for at least 5 years, in no event may more than 50 
        percent of the assets of the corporation qualify as used in the 
        active conduct of a qualified trade or business by reason of 
        this paragraph.
            ``(7) Maximum real estate holdings.--A corporation shall 
        not be treated as meeting the requirements of paragraph (2) for 
        any period during which more than 10 percent of the total value 
        of its assets consists of real property which is not used in 
        the active conduct of a qualified trade or business. For 
        purposes of the preceding sentence, the ownership of, dealing 
        in, or renting of real property shall not be treated as the 
active conduct of a qualified trade or business.
            ``(8) Computer software royalties.--For purposes of 
        paragraph (2), rights to computer software which produces 
        active business computer software royalties (within the meaning 
        of section 543(d)(1)) shall be treated as an asset used in the 
        active conduct of a trade or business.
    ``(i) Regulations.--The Secretary may prescribe such regulations as 
may be necessary to carry out the purposes of this section, including 
regulations coordinating the application of this section with the 
consolidated return regulations and regulations providing for the 
application of this section to short taxable years.''.
                    (B) Conforming amendments.--
                            (i) Section 55(c)(1) of the Internal 
                        Revenue Code of 1986 is amended by striking 
                        ``section 49(b)'' and inserting ``section 
                        35(g), 49(b),''.
                            (ii) Section 1324(b)(2) of title 31, United 
                        States Code, is amended by striking ``or'' 
                        before ``enacted'' and by inserting before the 
                        period at the end ``, or from section 35 of 
                        such Code''.
                    (C) Clerical amendment.--The table of sections for 
                subpart C of part IV of subchapter A of chapter 1 of 
                the Internal Revenue Code of 1986 is amended by 
                striking the item relating to section 35 and inserting 
                the following new items:

                              ``Sec. 35. Breakthrough research credit.
                              ``Sec. 36. Overpayments of tax.''.
                    (D) Effective date.--The amendments made by this 
                paragraph shall apply to taxable years beginning after 
                December 31, 2001.

SEC. 7. BIOTERRORISM COUNTERMEASURE PURCHASE FUND.

    (a) Purpose.--It is the purpose of this section to create 
incentives for private for-profit sector research that is intended to 
lead to the development of countermeasures to respond to an attack with 
biological agents or toxins.
    (b) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        the Centers for Disease Control and Prevention.
            (2) Eligible countermeasure.--The term ``eligible 
        countermeasure'' means a countermeasure (as defined in section 
        3(1)) developed by an entity that has been certified under 
        section 5(d) (other than a research tool).
            (3) Fund.--The term ``Fund'' means the Bioterrorism 
        Countermeasure Purchase Fund established under subsection (c).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
    (c) Establishment of Fund.--As of the date that the Secretary 
determines that any eligible countermeasure is available for purchase, 
there is established in the Treasury of the United States a fund to be 
known as the ``Bioterrorism Countermeasure Purchase Fund'' consisting 
of amounts appropriated under subsection (f).
    (d) Investment of Fund.--Amounts in the Fund shall be invested in 
accordance with section 9702 of title 31, United States Code, and any 
interest on, and proceeds from any such investment shall be credited to 
and become part of the Fund.
    (e) Use of Fund.--
            (1) In general.--The Secretary is authorized to expend 
        amounts in the Fund for purchases of eligible countermeasures. 
        Such countermeasures shall be made available to the Director 
        and distributed as the Director, in consultation with the 
        Director of the Office of Homeland Security and the Secretary 
        of Health and Human Services, determines appropriate.
            (2) Purchase and distribution of countermeasures.--
        Countermeasures purchased by the Fund--
                    (A) shall be purchased at a negotiated unit price;
                    (B) shall be approved by the Food and Drug 
                Administration; and
                    (C) shall be made under a formula establishing a 
                minimum price per dose, minimum number of doses, and 
                minimum technical requirements for the eligible 
                countermeasure.
            (3) Distribution.--Eligible countermeasures purchased by 
        the Fund shall be distributed as provided for by the Director, 
        in consultation with the Director of Homeland Security and the 
        Secretary of Health and Human Services, determines appropriate 
        after--
                    (A) consideration of the prevalence of the 
                infection to be treated by the eligible countermeasure; 
                and
                    (B) consideration of the ability of the recipient 
                to effectively and safely deliver the countermeasures.
            (4) Rule of construction.--Nothing in this subsection shall 
        be construed to require that the Fund purchase more than one 
eligible countermeasure for each agent or toxin contained on the 
Biological and Chemical Agent Priority List developed under section 4.
            (5) Regulations.--The Director shall promulgate such 
        regulations as are necessary to carry out the provisions of 
        this subsection.
    (f) Appropriations.--
            (1) In general.--Subject to paragraph (2), there are 
        appropriated out of any funds in the Treasury not otherwise 
        appropriated such sums as may be necessary to carry out the 
        purposes of the Fund for each of 10 fiscal years beginning with 
        the first fiscal year after the date that the Secretary 
        determines that any eligible countermeasure is available for 
        purchase by the Fund.
            (2) Transfer to fund.--The Secretary shall transfer the 
        amount appropriated under paragraph (1) for a fiscal year to 
        the Fund.
            (3) Availability.--Amounts appropriated under this section 
        shall remain available until expended.
    (g) Terms of Contracts.--Notwithstanding any other provision of 
law, a contract entered into by the Director under this section shall 
be for a period of not to exceed 10 years.
    (h) Rule of Construction.--Nothing in this section shall be 
construed to limit in any manner, the sale or terms of sale of an 
eligible countermeasure to any other entity or individual.

SEC. 8. PATENT TERM PROTECTION.

    (a) Election.--
            (1) In general.--An entity that is certified under section 
        5(d) may elect to receive patent protection under either 
        section 156a or 158 of title 35, United States Code, (as 
        amended by this section) if the countermeasure involved is an 
        eligible countermeasure as defined under section 7. An entity 
        that is not a qualified small business as defined in section 
        1202 of the Internal Revenue Code of 1986 (as amended by 
        section 6) may elect only the first of these provisions.
            (2) Time for election.--An election shall be made by an 
        entity under paragraph (1) within 60 days after the date on 
        which the countermeasure involved is available for purchase 
        under section 7. An election under this subsection shall be 
        irrevocable.
    (b) Extension of Patent Terms Relating to Countermeasures for 
Certain Biological or Chemical Agents or Toxins.--
            (1) In general.--Chapter 14 of title 35, United States 
        Code, is amended by inserting after section 156 the following:
``Sec. 156a. Extension of patent terms relating to countermeasures for 
              certain biological or chemical agents or toxins
    ``(a) Definitions.--In this section, the term--
            ``(1) `product' means the new drug, antibiotic drug, or 
        human biological product to which subsection (b) applies; and
            ``(2) `regulatory review period' means--
                    ``(A) the period beginning on the date a patent is 
                issued through the date of the first filing of an 
                application relating to human clinical trials for the 
                subject of that patent with the Food and Drug 
                Administration under the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 301 et seq.) or the Public 
                Health Service Act (42 U.S.C. 201 et seq.), and 
                includes any period prior to such issuance during which 
                the Food and Drug Administration is reviewing such 
                application;
                    ``(B) the period beginning on the date an exemption 
                under section 505(i) of the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 355(i)) became effective for 
                the approved product and ending on the date an 
                application was initially submitted for such product 
                under section 351 of the Public Health Service Act (42 
                U.S.C. 262) or section 505 of the Federal Food, Drug, 
                and Cosmetic Act (21 U.S.C. 355); and
                    ``(C) the period beginning on the date the 
                application was initially submitted for the approved 
                product under section 351 of the Public Health Service 
                Act (42 U.S.C. 262) or section 505 of the Federal Food, 
                Drug, and Cosmetic Act (21 U.S.C. 355) and ending on 
                the date such application was approved under the 
                applicable section.
    ``(b) Patent.--A patent referred to under subsection (c) is any 
patent that--
            ``(1) encompasses within its scope a composition of matter, 
        a method of using such composition, a method of manufacturing 
        such composition, or a process for using such composition 
        relating to a new drug, antibiotic drug, or human biological 
        product (as those terms are used in the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 301 et seq.) and the Public Health 
        Service Act (42 U.S.C. 201 et seq.)); and
            ``(2) is an eligible countermeasure as defined under 
        section 7 of the Robert Stevens, Thomas Morris Jr., Joseph 
        Curseen, Kathy Nguyen, Ottilie Lundgren, and Lisa J. Raines 
        Biological and Chemical Weapons Research Act.
    ``(c) Patent Extension.--Notwithstanding any specific limitations 
on the terms of patent extensions under section 156, the term of a 
patent described under subsection (b) shall be extended under this 
section from the original expiration date of the patent by the period 
of time that is equal to the full regulatory review period for the 
product, and which shall include any patent term adjustment under 
section 154(b).
    ``(d) Administrative Provisions.--
            ``(1) In general.--To obtain an extension of the term of a 
        patent under this section, the owner of record of the patent or 
        its agent shall submit an application to the Patent and 
        Trademark Office.
            ``(2) Content.--The application shall contain--
                    ``(A) the identity of the approved product and the 
                Federal statute under which regulatory review occurred;
                    ``(B) the identity of the patent for which an 
                extension applies;
                    ``(C) documentation that the product is an eligible 
                countermeasure as defined under section 7 of the Robert 
                Stevens, Thomas Morris Jr., Joseph Curseen, Kathy 
                Nguyen, Ottilie Lundgren, Lisa J. Raines Biological and 
                Chemical Weapons Research Act; and
                    ``(D) such patent or other information as the 
                Office may require.
            ``(3) Submission of application.--An application may only 
        be submitted within the 60-day period beginning on the date the 
        product became eligible for purchase under section 7 of the 
        Robert Stevens, Thomas Morris Jr., Joseph Curseen, Kathy 
        Nguyen, Ottilie Lundgren, and Lisa J. Raines Biological and 
        Chemical Weapons Research Act. The submission of an application 
        under this section is an irrevocable election of the 
        application of this section to a patent consistent with 
        paragraph (4).
            ``(4) Exclusive application.--Sections 156 shall not apply 
        to any patent for which an application is filed under this 
        section.
            ``(5) Rule of construction.--Nothing in this section shall 
        be construed to prohibit an extension of the term of patent 
        relating to a product that, before the effective date of this 
        section--
                    ``(A) was approved for commercial marketing for 
                non-countermeasure uses; or
                    ``(B) was approved for commercial marketing.''.
            (2) Technical and conforming amendment.--The table of 
        sections for chapter 14 of title 35, United States Code, is 
        amended by inserting after the item relating to section 156 the 
        following:

``156a. Extension of patent terms relating to countermeasures for 
                            certain biological or chemical agents or 
                            toxins.''.
    (c) General Extension of Certain Patent Terms.--
            (1) In general.--Chapter 14 of title 35, United States 
        Code, is amended by adding at the end the following:
``Sec. 158. Patent term for patents held by entities with certain 
              research certifications
    ``(a) Patent Term.--The term of a patent described under subsection 
(b) shall be for a period of 2 years in addition to the term which 
would otherwise apply except for this section.
    ``(b) Patent.--A patent referred to under subsection (a) is any 
patent that--
            ``(1) is held by an entity that holds a certification under 
        section 5(d)(2) of the Robert Stevens, Thomas Morris Jr., 
        Joseph Curseen, Kathy Nguyen, Ottilie Lundgren, and Lisa J. 
        Raines Biological and Chemical Weapons Research Act with 
        respect to a product, a method of manufacturing such product, 
        and a method of using such product;
            ``(2) is an eligible countermeasure as defined under 
        section 7 of such Act; and
            ``(3) subject to subsections (c) and (d), is designated by 
        that entity as the patent to which this section applies.
    ``(c) Limitations and Conditions.--In the administration of this 
section--
            ``(1) only 1 patent may be designated with respect to each 
        certification held by an entity;
            ``(2) no redesignation of another patent may be made; and
            ``(3) the patent designated by the entity--
                    ``(A) shall be issued before the date of a filing 
                under subsection (d);
                    ``(B) shall be held by that entity for at least 1 
                year before the date of the filing under subsection 
                (d);
                    ``(C) may not have been acquired by that entity 
                from another entity for the purpose of the treatment of 
                that patent under subsection (a); and
                    ``(D) is not required to be related to the subject 
                of the certification held by the entity.
    ``(d) Filing.--
            ``(1) In general.--An entity that holds a certification 
        under section 5(d)(2) of the Robert Stevens, Thomas Morris Jr., 
        Joseph Curseen, Kathy Nguyen, Ottilie Lundgren, and Lisa J. 
        Raines Biological and Chemical Weapons Research Act shall, with 
        respect to a product that is an eligible countermeasure as 
        defined under section 7 of such Act, file with the Patent and 
        Trademark Office--
                    ``(A) a copy of that certification; and
                    ``(B) a designation of the patent to which this 
                section applies.
            ``(2) Irrevocable and exclusive.--
                    ``(A) Irrevocable election.--A filing under this 
                section is an irrevocable election of the application 
                of this section to a patent consistent with 
                subparagraph (B).
                    ``(B) Exclusive.--Sections 156 shall not apply to 
                any patent for which there is a filing under this 
                section.''.
            (2) Technical and conforming amendment.--The table of 
        sections for chapter 14 of title 35, United States Code, is 
        amended by adding at the end the following:

``158. Patent term for patents held by entities with certain research 
                            certifications.''.
    (d) Exclusive Licensing.--Notwithstanding sections 200, 203, and 
209 of title 35, United States Code, an establishment that is certified 
under section 5(d) with respect to a product that is an eligible 
countermeasure as defined under section 7 may exclusively license such 
patented product.

SEC. 9. LIABILITY AND INDEMNIFICATION.

    Title III of the Public Health Service Act is amended by inserting 
after section 352 (42 U.S.C. 263) the following:

``SEC. 352A. LIABILITY AND INDEMNIFICATION.

    ``(a) Indemnification and Defense Agreements.--Notwithstanding 
sections 1341, 1342, 1349, 1350, and 1351 and subchapter II of chapter 
15, of title 31, United States Code, or any other provision of law, the 
Secretary--
            ``(1) shall enter into agreements to indemnify and defend 
        persons or entities engaged in the research, development, 
        production, distribution, administration or use of 
        countermeasures (as defined in section 3(1) of the Robert 
        Stevens, Thomas Morris Jr., Joseph Curseen, Kathy Nguyen, 
        Ottilie Lundgren, and Lisa J. Raines Biological and Chemical 
        Weapons Research Act);
            ``(2) shall enter into agreements to indemnify and defend 
        persons or entities engaged in the research, development, 
        production, distribution, administration or use of 
        countermeasures; and
            ``(3) may enter into such agreements with other persons if 
        the Secretary determines that the national interest in 
        combating terrorism, or the protection of the public health, or 
        both, reasonably requires such an agreement.
    ``(b) Protections.--An indemnification and defense agreement shall 
protect against claims or civil actions (including reasonable expenses 
of litigation or settlement) by third persons, for damages (including 
death, bodily injury, economic losses, non-economic losses, or loss of 
or damage to property or punitive damages), allegedly caused by the 
research, development, production, distribution, administration or use 
of a countermeasure (including a vaccine or antitoxin).
    ``(c) Exclusive Remedy.--
            ``(1) In general.--This section shall constitute the 
        exclusive remedy with respect to a civil action filed against 
        persons or entities within the scope of an indemnification and 
        defense agreement entered into under subsection (a), for 
        damages (including bodily injury, death, economic losses, non-
        economic losses or damage to property or punitive damages), 
        consistent with the limitations contained in paragraph (2), to 
        the extent that the civil action arises from the research, 
        development, production, distribution, administration or use of 
        a countermeasure (including vaccines and antitoxins).
            ``(2) Limitation.--No exclusive civil action under this 
        section shall be permitted unless the amount in controversy 
        exceeds $10,000.
    ``(d) Requirements.--An indemnification and defense agreement 
shall--
            ``(1) require notice to be provided to the United States of 
        any claim or civil action (including an exclusive civil action) 
        that is filed against persons or entities who are parties to 
        such agreement for any alleged damages (including bodily 
        injury, death, economic losses, non-economic losses, and loss 
        of or damage to property or punitive damages) allegedly caused 
        by the research, development, production, distribution, 
        administration or use of a countermeasure; and
            ``(2) require control of, or assistance in, the defense by 
        the United States of such claim or civil action.
    ``(e) Venue; Application of Law; and Damages.--
            ``(1) Venue.--An exclusive civil action under this section 
        shall be filed in any United States district court of otherwise 
        appropriate jurisdiction. Appeals from appealable actions of 
        such courts in such actions shall be taken to the Court of 
        Appeals for the Federal Circuit and, as appropriate, to the 
        United States Supreme Court.
            ``(2) Application of law.--An exclusive civil action filed 
        under this section shall be governed by Federal law. No State 
        or political subdivision of a State shall have any authority to 
        enforce any other law or common law standard governing a civil 
        action for damages (including damages for bodily injury, death, 
        economic damages, noneconomic damages, or loss or damage to 
        property or punitive damages) arising out of the conduct or 
        actions covered by an indemnification and defense agreement. 
        Any civil action in State or Federal Court that is barred from 
        consideration by this section shall be removed or transferred 
        to the appropriate Federal district court or dismissed, as 
        appropriate.
            ``(3) Limitations on damages.--In an exclusive civil action 
        filed under this section an award for non-economic damages 
        shall not exceed $250,000 per plaintiff. In no such cases shall 
        punitive or exemplary damages be awarded.
            ``(4) Reduction in amounts.--In an exclusive civil action 
        under this section, an award to a plaintiff shall be reduced, 
        by the presiding judge, to the extent that the plaintiff has 
        otherwise received compensation for the damages at issue from a 
        government, an insurance provider, or other third party.
    ``(f) Definitions.--In this section:
            ``(1) Exclusive civil action.--The term `exclusive civil 
        action' means a civil action described in subsection (c)(1).
            ``(2) Indemnification and defense agreements.--The term 
        `indemnification and defense agreements' means the agreements 
        described in subsection (a).''.

SEC. 10. CONSTRUCTION OF BIOSAFETY RESEARCH FACILITIES.

    (a) Findings.--Congress finds that--
            (1) research to develop countermeasures requires the use of 
        special facilities where biological agents can be handled 
        safely;
            (2) very few companies can capitalize the construction of 
        these special facilities; and
            (3) the Federal Government can facilitate research and 
        development of countermeasures by financing the construction of 
        these special facilities.
    (b) Grants Authorized.--
            (1) In general.--The Director of the National Institutes of 
        Health is authorized to award grants and contracts to grantees 
        to construct, maintain, and manage (including funding for staff 
        and staff training) biosafety level 3-4 facilities.
            (2) Requirements.--To be eligible for a grant under 
        paragraph (1) an entity shall--
                    (A) allow use of the facility involved by only 
                those researchers who meet qualifications set by the 
                Director of the Office of Homeland Security;
                    (B) give priority for the use of the facility 
                involved to those entities that have been registered 
                and certified by the Director of the Office of Homeland 
                Security to develop countermeasures; and
                    (C) allow the National Institutes of Health to 
                inspect the facility involved at any time.
            (3) Number of grants.--The Director of the Office of 
        Homeland Defense shall determine the number of facilities that 
        need to be constructed under this section, not to exceed 10 
        such facilities nationwide, and the Director of the National 
        Institutes of Health shall award grants based on such 
        determination.
    (c) Application.--
            (1) In general.--To be eligible to receive a grant under 
        this section an entity shall submit to the Director an 
        application at such time, in such form and containing such 
        information, as the Director may require.
            (2) Contents.--Each application submitted pursuant to 
        paragraph (1) shall--
                    (A) provide detailed information on the technical 
                specifications of proposed facilities;
                    (B) propose a design that includes offices for 
                personnel, visiting researchers, and facilities for 
                research and laboratory materials;
                    (C) provide assurances that the facilities shall be 
                available on a fee-for-service or other basis to 
                companies and academic researchers; and
                    (D) provide assurances that the facilities will be 
                constructed as secure facilities.
    (d) Definitions.--For the purposes of this section--
            (1) unless otherwise specifically identified, the term 
        ``Director'' means the Director of the National Institutes of 
        Health; and
            (2) a ``biosafety level 3-4 facility'' means a facility for 
        research on indigenous, exotic, or dangerous agents with the 
        potential for aerosol transmission of disease that may have 
        serious or lethal consequences or that pose a high risk of 
        life-threatening disease, aerosol-transmitted laboratory 
        infections, or related agents with unknown risk of 
        transmission.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 11. NATIONAL INSTITUTES OF HEALTH COUNTERMEASURES PARTNERSHIP 
              CHALLENGE GRANTS.

    (a) Grants Authorized.--The Director of the National Institutes of 
Health (in this section referred to as the ``Director'') is authorized 
to award partnership challenge grants to promote joint ventures between 
the National Institutes of Health, its grantees, and for-profit 
biotechnology, pharmaceutical, and medical device industries for the 
development of countermeasures and research tools.
    (b) Regulations.--The Director shall issue regulations within 90 
days of the date of enactment of this section to implement the awarding 
of grants under subsection (a).
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated $200,000,000 for each of fiscal years 2002, 2003, 2004, 
2005, and 2006 for the purpose of carrying out this section.

SECTION 12. EXPANDED HUMAN CLINICAL TRIALS QUALIFYING FOR ORPHAN DRUG 
              CREDIT.

    (a) In General.--Subclause (I) of section 45C(b)(2)(A)(ii) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                                ``(I) after the date that the 
                                application is filed for designation 
                                under such section 526, and''.
    (b) Conforming Amendment.--Clause (i) of section 45C(b)(2)(A) of 
the Internal Revenue Code of 1986 is amended by inserting ``which is'' 
before ``being'' and by inserting before the comma at the end ``and 
which is designated under section 526 of such Act''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2001.
                                 <all>