[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7539 Introduced in House (IH)]

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118th CONGRESS
  2d Session
                                H. R. 7539

To require the Secretary of the Treasury to guarantee BioBonds in order 
   to provide funding for loans to eligible biomedical companies and 
universities to carry out clinical trials approved by the Food and Drug 
                Administration, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 5, 2024

Mr. Fitzpatrick (for himself and Mr. Bishop of Georgia) introduced the 
   following bill; which was referred to the Committee on Energy and 
                                Commerce

_______________________________________________________________________

                                 A BILL


 
To require the Secretary of the Treasury to guarantee BioBonds in order 
   to provide funding for loans to eligible biomedical companies and 
universities to carry out clinical trials approved by the Food and Drug 
                Administration, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Long-term Opportunities for 
Advancing New Studies for Biomedical Research Act'' or the ``LOANS for 
Biomedical Research Act''.

SEC. 2. BIOBONDS PROGRAM.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of the Treasury, in consultation 
with the Secretary of Health and Human Services, shall establish a 
program, to be known as the ``BioBonds Program'', to increase 
innovative biomedical research into therapies to address unmet medical 
needs, under which biomedical researchers seeking to conduct clinical 
trials with respect to a drug or device, but who cannot secure 
appropriate funding to conduct such trials, receive financial 
assistance through--
            (1) the purchasing of loans by fiscal agents under section 
        3; and
            (2) the sale and guarantee of BioBonds collateralized by 
        such loans under section 4.
    (b) Biomedical Researchers Eligible for Financial Assistance.--
            (1) In general.--A person shall be eligible to receive a 
        loan under the BioBonds Program if such person is conducting or 
        seeking to conduct research with respect to a drug or device 
        that is--
                    (A) intended for use to meet an unmet medical need 
                (as determined by the Secretary of Health and Human 
                Services); and
                    (B) under investigation in a controlled clinical 
                trial under--
                            (i) an investigational drug application in 
                        effect under section 505(i) of the Federal 
                        Food, Drug, and Cosmetic Act (21 U.S.C. 355(i)) 
                        or section 351(a)(3) of the Public Health 
                        Service Act (42 U.S.C. 262(a)(3)) (as 
                        applicable); or
                            (ii) an investigational device exemption in 
                        effect under section 520(g) of the Federal 
                        Food, Drug, and Cosmetic Act (21 U.S.C. 
                        360j(g)).
            (2) Rulemaking.--The Secretary of the Treasury, in 
        consultation with the Secretary of Health and Human Services, 
        shall issue rules to carry out this subsection.

SEC. 3. PURCHASE OF LOANS BY FISCAL AGENTS.

    (a) In General.--Fiscal agents shall purchase loans--
            (1) made to an eligible recipient under section 2(b) for 
        the purpose of conducting the applicable clinical trial 
        described in that section; and
            (2) with respect to which the fiscal agent determines that 
        the borrower has the ability to repay the loan, based on 
        collateral and financial capabilities and not on the prospects 
        for success of the clinical trial.
    (b) Priority for Purchase of Loans.--The Secretary of the Treasury 
shall issue rules to require fiscal agents, in purchasing loans under 
this section, to purchase loans with respect to a diverse range of 
biomedical projects and not to favor one disease or disability, and to 
give priority to loans with potential to address unmet public health 
needs across the spectrum of diseases and disabilities;
    (c) Maximum Loan Amount.--A fiscal agent may not purchase loans in 
any one year with respect to a single recipient in an amount more than 
$25,000,000.
    (d) Loan Terms and Conditions.--
            (1) In general.--The Secretary of the Treasury, in 
        consultation with the Secretary of Health and Human Services, 
        shall issue rules--
                    (A) to establish criteria for the terms for loans 
                that are eligible for purchase under this section;
                    (B) to establish criteria for the interest rate for 
                loans that are eligible for purchase under this 
                section, which shall be based on applicable rates for 
                obligations of the Department of the Treasury of 
                comparable maturity plus a rate to be determined by the 
                Secretary of the Treasury to reflect--
                            (i) prevailing market conditions;
                            (ii) taxpayer protection; and
                            (iii) the need to ensure ample funding for 
                        clinical trials described in section 2;
                    (C) in accordance with paragraph (2), to establish 
                an upfront fee of not greater than 1 percent of each 
                loan principal amount at origination to cover 
                administrative and financing costs associated with the 
                loans eligible for purchase under this section; and
                    (D) to permit the use of warrants and similar 
                instruments with respect to loans that are eligible for 
                purchase under this section, where necessary to protect 
                taxpayer interests.
            (2) Fees.--
                    (A) In general.--Fees established under paragraph 
                (1)(C) shall be financed by addition of the appropriate 
                amount reflecting each upfront fee to the balance of 
                each loan upon origination and shall be collected in 
                concert with all loan payments collected by the fiscal 
                agent.
                    (B) Requirement.--If a loan is repaid ahead of its 
                stated maturity, becomes delinquent, or defaults, then 
                the full unpaid balance of a fee established under 
                paragraph (1)(C) that remains at such time shall be 
                added to the principal that must be fully satisfied.

SEC. 4. BIOBONDS.

    (a) Issuance.--Each fiscal agent that purchases a loan under 
section 3 shall issue bonds, to be known as ``BioBonds'', 
collateralized by such loans, and sell the BioBonds to investors.
    (b) BioBond Guarantee.--The Secretary of the Treasury shall provide 
a guarantee of not greater than 90 percent of the payment of principal 
(but not the payment of interest) for a BioBond.
    (c) Auctions.--The Secretary of the Treasury may--
            (1) authorize fiscal agents to use an auction to select the 
        purchasers of BioBonds; and
            (2) require such auction to include a process that 
        minimizes the risk to the Federal Government of the Federal 
        guarantee involved by allowing bidders for a BioBond to compete 
        against each other by bidding on the percentage of the Federal 
        guarantee under subsection (b) with respect to the BioBond, 
        with the bid for the lowest percentage winning the auction, 
        taking into account other terms and conditions set by the 
        issuer to ensure the lowest total cost to the Federal 
        Government.
    (d) Portfolio Diversity.--With respect to an issuance of BioBonds 
and the loans collateralizing such issuance, not greater than 15 
percent of the principal amount of such issuance may relate to a group 
of related diseases or disabilities (as defined by the Secretary of 
Health and Human Services).
    (e) Prioritization of Taxpayer Interests.--All proceeds received 
from Biobond issuance shall be invested in obligations of the Federal 
Government in order to ensure a revenue stream in addition to loan 
repayment that protects taxpayers. All BioBonds shall be structured to 
give first priority to protecting the interests of the United States by 
ensuring that--
            (1) all cash proceeds received from the repayment of a 
        BioBond and income derived from loan-proceed reinvestment are 
        first used to reduce the amount of principal guaranteed by the 
        Secretary of the Treasury;
            (2) the Secretary of the Treasury has a senior claim on all 
        assets and collateral under a BioBond to the extent the 
        guarantee provided by the Secretary is not extinguished; and
            (3) to the extent that a Biobond is fully repaid without 
        resort to the guarantee, all proceeds from reinvested funds 
        shall be the property of the United States.
    (f) Rule of Construction.--Nothing in this section may be construed 
to prohibit underwriters from varying terms and conditions consistent 
with the rules issued by the Secretary of the Treasury with respect to 
BioBonds.

SEC. 5. FISCAL AGENTS.

    (a) In General.--The Secretary of the Treasury shall contract with 
institutions to carry out the duties of fiscal agents under this Act, 
under such criteria as the Secretary determines appropriate.
    (b) Sound Underwriting Practices.--The Secretary of the Treasury 
shall issue rules to ensure that fiscal agents use sound underwriting 
practices that protect the interests of--
            (1) the United States;
            (2) BioBond investors; and
            (3) the long-term promotion of innovative biomedical 
        research into therapies to address unmet medical needs.
    (c) Compensation.--A fiscal agent shall be compensated for 
performing duties under this Act from the proceeds from the sale of 
Biobonds issued by the fiscal agent, at such rate and on such terms as 
the Secretary of the Treasury may provide.
    (d) Rulemaking.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of the Treasury shall issue final 
rules to carry out this section.

SEC. 6. REPORTS.

    (a) GAO Study and Reports on Other Research Projects.--
            (1) Ongoing study.--The Comptroller General of the United 
        States shall carry out an ongoing study to consider whether a 
        program similar to the BioBonds Program should be established 
        for other biomedical research projects.
            (2) Report.--The Comptroller General shall issue a report 
        to the Congress, not less frequently than annually, on all 
        findings and determinations made in carrying out the study 
        required under paragraph (1).
    (b) Reports on the BioBonds Program.--Not later than 2 years after 
the date on which BioBonds are first issued, and annually thereafter 
during the period ending on the date that is 4 years after the date on 
which BioBonds are first issued, the Comptroller General and the 
Secretary of the Treasury, in consultation with the Secretary of Health 
and Human Services, shall each issue a separate report to the Congress 
on--
            (1) the progress of the issuance of BioBonds;
            (2) the reasons for any problems achieving desired volumes 
        of BioBonds or the ability of the BioBonds Program to proceed 
        at a faster pace;
            (3) an analysis of the risk to the Government in providing 
        the Federal guarantee described under section 4(b);
            (4) any recommended improvements to the BioBonds Program; 
        and
            (5) any other matter that the Comptroller General or the 
        Secretary, respectively, determines is appropriate.

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated to the 
Secretary of the Treasury to pay for the cost of guaranteeing BioBonds 
under this Act $10,000,000,000 for each of fiscal years 2025, 2026, and 
2027.
    (b) Program Funding.--
            (1) Administrative expenses paid from bond sales.--Except 
        as provided under paragraph (2), the cost of carrying out this 
        Act, including the cost to the Secretary of the Treasury in 
        administering the BioBond Program, shall be recovered from the 
        proceeds from the sale of BioBonds or from fees as set forth in 
        paragraph (3).
            (2) Specific appropriation or contribution.--No guarantee 
        shall be made under this Act unless--
                    (A) an appropriation for the full cost of the 
                guarantee has been made;
                    (B) the Secretary has received from the BioBond 
                issuer a payment in full for the cost of the guarantee; 
                or
                    (C) a combination of an appropriation and the 
                deposit of a payment from the BioBond issuer has been 
                made in a sufficient amount to cover the full cost of 
                the guarantee.
            (3) Guarantee fees.--The Secretary of the Treasury shall 
        charge and collect fees for guarantees under this Act in 
        amounts the Secretary determines are sufficient to recover 
        applicable administrative expenses, and such fees--
                    (A) shall be available to the Secretary, without 
                further appropriation, to pay for the administrative 
                expenses related to guarantees under this Act; and
                    (B) are authorized to remain available until 
                expended.

SEC. 8. DEFINITIONS.

    In this Act, the following definitions apply:
            (1) Cost.--The term ``cost'' has the meaning given to the 
        term ``cost of a loan guarantee'' in section 502(5)(C) of the 
        Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(C)).
            (2) Eligible recipient.--The term ``eligible recipient'' 
        means a person described under section 2(b).
            (3) Fiscal agent.--The term ``fiscal agent'' means a person 
        selected as a fiscal agent under section 5(a).
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