[Senate Hearing 108-826]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-826

          BIOSHIELD II: RESPONDING TO AN EVER-CHANGING THREAT

=======================================================================

                             JOINT HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY

                                  and

          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                            OCTOBER 6, 2004

                               __________

                          Serial No. J-108-99

                               __________

         Printed for the use of the Committee on the Judiciary


                    U.S. GOVERNMENT PRINTING OFFICE
96-812                      WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa            PATRICK J. LEAHY, Vermont
ARLEN SPECTER, Pennsylvania          EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio                    HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
LARRY E. CRAIG, Idaho                CHARLES E. SCHUMER, New York
SAXBY CHAMBLISS, Georgia             RICHARD J. DURBIN, Illinois
JOHN CORNYN, Texas                   JOHN EDWARDS, North Carolina
             Bruce Artim, Chief Counsel and Staff Director
      Bruce A. Cohen, Democratic Chief Counsel and Staff Director
                              ----------                              

          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  JUDD GREGG, New Hampshire, Chairman
BILL FRIST, Tennessee                EDWARD M. KENNEDY, Massachusetts
MICHAEL B. ENZI, Wyoming             CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri        BARBARA A. MIKULSKI, Maryland
MIKE DeWINE, Ohio                    JAMES M. JEFFORDS (I), Vermont
PAT ROBERTS, Kansas                  JEFF BINGAMAN, New Mexico
JEFF SESSIONS, Alabama               PATTY MURRAY, Washington
JOHN ENSIGN, Nevada                  JACK REED, Rhode Island
LINDSEY O. GRAHAM, South Carolina    JOHN EDWARDS, North Carolina
JOHN W. WARNER, Virginia             HILLARY RODHAM CLINTON, New York
                  Sharon R. Soderstrom, Staff Director
      J. Michael Myers, Minority Staff Director and Chief Counsel


                            C O N T E N T S

                              ----------                              

                STATEMENTS OF MEMBERS OF THE COMMITTEES

                                                                   Page

Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming..     6
    prepared statement...........................................   114
Gregg, Hon. Judd, a U.S. Senator from the State of New Hampshire.     1
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     2
Kennedy, Hon. Edward M., a U.S. Senator from the State of 
  Massachusetts, prepared statement..............................   138
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.    21
    prepared statement...........................................   157
Reed, Hon. Jack, a U.S. Senator from the State of Rhode Island...     9
Schumer, Hon. Charles E., a U.S. Senator from the State of New 
  York...........................................................    22

                               WITNESSES

Angulo, Carlos, Partner, Zuckerman Spaeder LLP, on behalf of the 
  Coalition for a Competitive Pharmaceutical Market..............    14
Bartlett, John G., M.D., Chief, Division of Infectious Diseases, 
  Johns Hopkins University School of Medicine, on behalf of the 
  Infectious Disease Society of America..........................    17
Clerici, John M., Partner, McKenna, Long & Aldridge, LLP, 
  Washington, D.C................................................    28
Grant, Christine, Vice President, Public Policy and Government 
  Relations, Aventis Pasteur.....................................     7
Greenberg, Patricia B., R.N., on behalf of the Service Employees 
  International Union, AFL-CIO...................................    30
Jaeger, Kathleen D., President and Chief Executive Officer, 
  Generic Pharmaceutical Association, Arlington, Virginia........    12
Kushan, Jeffrey P., Partner, Sidley, Austin, Brown and Wood, LLP, 
  Washington, D.C................................................    26
Timmins, Alan P., President and Chief Operating Officer, AVI 
  BioPharma, Inc., Portland, Oregon..............................    10

                         QUESTIONS AND ANSWERS

Responses of Carlos Angulo to questions submitted by Senators 
  Kennedy and Schumer............................................    33
Responses of Kathleen Jaeger to questions submitted by Senators 
  Kennedy and Schumer............................................    38
Responses of John Clerici to questions submitted by Senators 
  Hatch and Kennedy..............................................    48
Responses of Christine Grant to questions submitted by Senators 
  Kennedy and Schumer............................................    56
Responses of Jeffrey Kushan to questions submitted by Senator 
  Kennedy........................................................    62
Responses of Alan Timmins to questions submitted by Senators 
  Kennedy and Schumer............................................    67

                       SUBMISSIONS FOR THE RECORD

Aetna, Inc., Mark Rubino, RPh., MHA, Chief Pharmacy Officer, 
  Hartford, Connecticut, statement...............................    68
Angulo, Carlos, Partner, Zuckerman Spaeder LLP, on behalf of the 
  Coalition for a Competitive Pharmaceutical Market, prepared 
  statement......................................................    69
Bartlett, John G., M.D., Chief, Division of Infectious Diseases, 
  Johns Hopkins University School of Medicine, on behalf of the 
  Infectious Disease Society of America, prepared statement and 
  attachments....................................................    73
Biotechnology Industry Organization, Washington, D.C., prepared 
  statement......................................................    86
Clerici, John M., Partner, McKenna, Long & Aldridge, LLP, 
  Washington, D.C., prepared statement...........................    90
Grant, Christine, Vice President, Public Policy and Government 
  Relations, Aventis Pasteur, prepared statement.................   115
Greenberg, Patricia B., R.N., on behalf of the Service Employees 
  International Union, AFL-CIO, prepared statement...............   122
Jaeger, Kathleen D., President and Chief Executive Officer, 
  Generic Pharmaceutical Association, Arlington, Virginia, 
  prepared statement.............................................   127
Kushan, Jeffrey P., Partner, Sidley, Austin, Brown and Wood, LLP, 
  Washington, D.C., prepared statement and attachment............   143
Lieberman, Hon. Joseph, a U.S. Senator from the State of 
  Connecticut, statement and attachments.........................   160
Rafferty, James G., Harkins Cunningham LLP, Washington, D.C., 
  statement......................................................   221
Teva Pharmaceuticals USA, George S. Barrett, President and Chief 
  Executive Officer, North Wales, Pennsylvania, letter...........   233
Timmins, Alan P., President and Chief Operating Officer, AVI 
  BioPharma, Inc., Portland, Oregon, prepared statement..........   236

 
          BIOSHIELD II: RESPONDING TO AN EVER-CHANGING THREAT

                              ----------                              


                       WEDNESDAY, OCTOBER 6, 2004

                              United States Senate,
                                Committee on the Judiciary,
       Committee on Health, Education, Labor, and Pensions,
                                                   Washington, D.C.
    The committees met jointly, pursuant to notice, at 10:00 
a.m., in Room 216, Hart Senate Office Building, Hon. Judd 
Gregg, Chairman of the Committee on Health, Education, Labor, 
and Pensions, presiding.
    Present: Senators Gregg, Hatch, Enzi, Reed, Leahy, and 
Schumer.

 OPENING STATEMENT OF HON. JUDD GREGG, A U.S. SENATOR FROM THE 
                     STATE OF NEW HAMPSHIRE

    Chairman Gregg. I know we are going to be joined by a 
number of other colleagues. Unfortunately, at this time, there 
is a conference going on relatively to significant tax 
legislation which I suspect Senator Hatch is involved in. I am 
also involved in it relative to a number of issues, one of 
which is going to be taken up this morning, so I may have to 
leave to attend that conference, unfortunately.
    But we did want to have this hearing today, this joint 
hearing today with the Judiciary Committee and the HELP 
Committee to address the issue of BioShield and how we are 
proceeding relative to the issue of bioterrorism and protecting 
our nation and our people against a bioterrorist attack.
    Throughout the 1990s and the 1980s and certainly the 1970s 
and the 1950s and 1960s, when you discussed national defense 
and infrastructure for national defense, you always talked 
about whether or not we had the industrial complex to be able 
to maintain our capacity to defend ourselves as a nation. 
People talked about whether we could build planes or whether we 
could build tanks or whether we could build artillery and there 
was always a concern that our defense industrial complex might 
be eroding or was being shipped overseas.
    Today, the defense industrial complex is entirely different 
because we are fighting a different war. The defense industrial 
complex, in other words, the industries which are going to 
defend us as a nation, are our technology industries and 
especially biologic industries. Our concern is that those 
industries which produce the medicines which will allow us to 
defend ourselves from an attack, a biological or chemical 
attack, those industries be vibrant, strong, and robust in 
their ability to produce first the research, and then produce 
the anti-toxins and the vaccines necessary to protect our 
people.
    That is why we passed BioShield. The whole concept behind 
BioShield was to create within the research community and those 
folks who produced biological agents which fight biological 
agents, vaccines specifically, produce an atmosphere where 
those companies, those individuals would have an incentive to 
go out and create the vaccines necessary to protect our people 
from attacks by biological agents, whether they be smallpox, 
anthrax, plague, botulism.
    We recognize as a Congress that there isn't a consumer 
group out there that is going to use these types of vaccines 
other than the government, and therefore the government had to 
set up a system to try to create an incentive to produce these 
types of cures and vaccines.
    The concern we have, I have, anyway, is that since 
BioShield has passed, we still have a very anemic response 
within the research communities and within the production 
communities to producing these types of vaccines and anti-
toxins which would protect us in the case of an attack. Less 
than 100 companies have actually come forward and said that 
they have an interest in pursuing biologics.
    So that creates a question. What else do we need to do?
    What else do we need to do to make sure that there is an 
incentive out there amongst our creative and innovative people 
to produce the necessary vaccines to protect us as a nation 
from these types of biological attacks, because we recognize 
that in today's world, it is a biological or chemical attack, 
along with a potential dirty bomb, that is the most significant 
threat to us as a nation.
    So that is what this hearing is about, to get an update on 
how people think BioShield I is working and to get some ideas 
as to what we should do should we pursue a BioShield II 
proposal.
    I certainly appreciate Senator Hatch taking the lead in 
this effort with the Judiciary Committee and the HELP Committee 
working together. That is the type of cooperation that I think 
reflects well on us as a Congress, and certainly Senator Hatch 
has been a leader in all sorts of areas dealing with 
pharmaceuticals especially, having written the Hatch-Waxman 
Act, and was chairman of this, or ranking member on this 
committee for a number of years, the HELP Committee, and now, 
of course, runs the Judiciary Committee. So his knowledge on 
this issue is instrumental to our capacity to be successful as 
a Congress. So I will yield to my fellow chairman, Senator 
Hatch.

STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE 
                            OF UTAH

    Chairman Hatch. Thank you, Mr. Chairman. I am grateful to 
be able to participate with you in this hearing because this is 
a very, very important hearing. We are both pulled all over 
Capitol Hill right now, so I am going to make my opening 
statement and then I am going to have to leave because I am in 
the middle of the conference on the Medicare, and you are 
also--on the FSC-ETI bill, excuse me, and that has been a very 
intense conference. But I understand Senator Enzi is going to 
be here, too.
    Chairman Gregg. Senator Enzi is going to be here.
    Chairman Hatch. That is great. You couldn't have anybody 
better. Let me just make these comments.
    More than three years ago--now, I want to welcome our 
witnesses. They are great witnesses, great people to have here 
on both panels and I just want to tell you how impressed and 
how proud I am to have all of you here.
    But let me just say, more than three years ago, our nation 
suffered the most deadly attack on its soil. We woke up on the 
morning of September 11, 2001, to a new reality. A month later, 
we again realized the magnitude of the ever-changing threat 
that we were facing when this building, this very building, was 
contaminated with anthrax and ended up being shut down for 
about three months. Most Americans were shaken out of their 
sense of complacency in 2001.
    After the events of 9/11, Congress took action to secure 
our borders, our ports, and our airlines and bolster our public 
health infrastructure. However, the essential steps necessary 
to secure our nation against the ongoing threat of bioterrorism 
are still being carefully evaluated, and while these steps are 
being evaluated, time is running out.
    We took an important first step when the Project BioShield 
Act of 2004, better known as BioShield, was signed into law in 
July. However, there is so much more that needs to be done. 
That is why the Judiciary Committee and the Senate HELP 
Committee are holding this hearing today, to raise awareness on 
what else needs to be done in order to combat bioterrorism.
    I couldn't be more happy to work with a fellow chairman 
than with Senator Gregg. He has done a terrific job on the HELP 
Committee. It is a committee I have always taken a great 
interest in. I just admire him greatly. He is a very, very 
intelligent man who has done an awful lot of good in this body. 
So it is a privilege to be here with him.
    It is common knowledge that terrorists are specifically 
interested in biological weapons. Many of these weapons were 
produced by Soviet scientists before the collapse of the Soviet 
Union and some experts believe that Soviet scientists concocted 
strains of smallpox that were 100 percent lethal. They 
developed a strain of yersenia pestis, the bacterium that 
causes the plague, which was resistant to ten types of 
antibiotics.
    Today, it is unclear where many of these former Soviet 
scientists are working, and even more disturbing, it is not 
clear if these bioterror agents are still being kept in the 
former Soviet Union. As new varieties of bioterror weapons are 
developed, the threat of another attack becomes very real.
    For this reason, I believe that the time for Congress to 
act on the Lieberman-Hatch-Gregg BioShield II legislation is 
now and I think it is important that we move ahead.
    Even if we continue investing resources to build up a 
prepared public health infrastructure, if we do not have the 
medicines to treat those who are exposed or infected, the only 
other option is quarantining these individuals, and my 
colleagues, quarantining individuals, hundreds, maybe even 
thousands of people, will be extremely difficult to manage. So 
this is important stuff.
    As I have said earlier, BioShield is only the first step to 
ensure readiness against this threat, and I am proud to say 
that the new law is based on legislation that my good friend 
and colleague, Senator Joe Lieberman, and I introduced this 
Congress, S. 666, the Biological, Chemical, and Radiological 
Weapons Countermeasures Research Act.
    Today's hearing will focus on the next steps, essentially, 
what is needed in a BioShield II package and what we should do 
about it. BioShield II is the next step in the legislative 
process toward accomplishing this important and time-sensitive 
goal of bioterror readiness, and Senator Lieberman and I intend 
to reintroduce BioShield II legislation in the 109th Congress.
    We simply cannot wait. Considering the anthrax attacks of 
2001 and the ricin attack on our nation's capitol in February 
of this year, we already have ample reason to believe that the 
July law, while an important first step, is not sufficient and 
we need to move or to enact a more comprehensive legislative 
strategy.
    Given the growing risk of further attacks on our nation and 
potentially devastating consequences of bioterrorism, we must 
abandon business as usual and take the vigorous steps that will 
be advocated through our BioShield II legislation.
    The purpose of today's hearing is to expose and explore an 
array of intellectual property, liability, and other incentives 
to ensure the creation of a robust biodefense industry that 
needs to be included in the BioShield II legislation. Direct 
government funding for this research is not the most effective 
strategy. To be effective, we must also enact incentives so 
that potential investors will want to fund the research 
associated with building a defense against potential attacks. 
We must have the biopharma industry working with us on these 
solutions.
    BioShield II will encourage biopharma companies to take the 
lead in the development of vaccines, therapeutics, and 
diagnostics to combat terrorism. The goal of our legislation is 
to have a safer and better prepared America, but in order to be 
prepared, we need to provide researchers with the proper 
incentives. These companies are worried about partnering with 
our government, and I believe Congress needs to engage the 
industry so that we can reap the benefits of their research. 
But forming partnerships with these companies is the key. 
Otherwise, this partnership will never work.
    I look forward to hearing from our witnesses regarding this 
matter and what their thoughts are on what incentives should be 
offered to these researchers and companies.
    Another critical question that will be explored today is 
whether these same incentives will apply to infectious diseases 
generally. In my opinion, all research on infectious diseases 
is interrelated, so we might strengthen bioterror research if 
the research focus is broader than just bioterror pathogens. 
Furthermore, by conducting this research, we may also discover 
cures for diseases that afflict the world's poorest nations.
    I would like to acknowledge the terrific work of the HELP 
Committee, especially Chairman Judd Gregg and Senator Ted 
Kennedy, the HELP Committee's Ranking Minority Member, Senator 
Enzi, as well, but every member of that committee. I 
particularly appreciate you folks on that committee recognizing 
the importance of this issue by agreeing to hold this joint 
hearing at such a busy time in the legislative session.
    Majority Leader Frist has also been a leader in this area, 
and I want to thank the Judiciary Committee's Ranking Minority 
Member, Senator Pat Leahy, for his cooperation on holding 
today's hearing. Bioterrorism is an extremely personal issue 
for him. His office was one of the offices that received a 
letter containing anthrax.
    Finally, I would like to recognize the work of our good 
friend, Senator Joe Lieberman, whose leadership on this issue 
has made the legislation possible and he deserves a lot of 
credit. I might add, he deserves credit for bringing this 
matter before our committees and the full Senate.
    I also want to recognize the indefatigable efforts of Chuck 
Ludlam of Senator Lieberman's staff for his considerable 
efforts in developing this legislation.
    Senator Lieberman is, of course, one of the managers of the 
intelligence reform bill which is pending on the floor this 
morning, and unfortunately, it is simply impossible for him to 
appear to present his testimony today. I ask unanimous consent 
that Senator Lieberman's testimony be included in the hearing 
record, and without objection, it will.
    Senator Lieberman has asked me to send his apologizes to 
the committee and to all witnesses. We are all under a lot of 
pressure right now because it is the end of the session. I know 
Senator Gregg has a thousand things to do, and I am pulled all 
over Capitol Hill right now. I just have to say that, again, I 
appreciate all the witnesses that are going to be here today.
    This is very important stuff, and I promise you that I am 
going to know everything that you say and I am going to pay 
very strict attention to it. I know all of your schedules are 
busy, too, and to join us today for this very important 
discussion is very important. So I look forward to hearing your 
thoughts and reading your thoughts on what should be included 
in our BioShield II legislation.
    I ask unanimous consent that the following statements be 
submitted for the record. First, the statement of James 
Rafferty from Harkins Cunningham on tax incentives.
    Second is the statement of George Barrett, President and 
CEO of Teva Pharmaceuticals.
    And, of course, the statement of the Biotechnology Industry 
Organization. Without objection, we will put those in the 
record.
    With that, I know Senator Leahy when he comes will have a 
statement, so maybe we could interrupt for Senator Leahy, or 
whoever is talking, when they finish, we can turn to Senator 
Leahy.
    Chairman Gregg. You and I are probably going to have to 
leave in a few minutes to go to the FSC conference, and so I 
have asked Senator Enzi to chair the hearing and introduce the 
witnesses.
    Chairman Hatch. That would be great.
    Chairman Gregg. I will stay as long as I can.
    Senator Enzi. Thank you, Mr. Chairman
    Chairman Hatch. Thank you for doing this, Senator Enzi.

 STATEMENT OF HON. MIKE ENZI, A U.S. SENATOR FROM THE STATE OF 
                            WYOMING

    Senator Enzi. [Presiding.] I will also make some brief 
comments. I want to thank the chairmen, both chairmen, for this 
effort. This is very unusual for the United States Senate, to 
combine two committees, but it demonstrates the importance of 
this particular issue and the way that the two committees have 
worked together to handle the pieces of it that come under 
their jurisdiction.
    The purpose of the hearing, of course, is to build a 
record. I think we have particularly capable witnesses today 
who will be building that record that the Senate can look at. 
We are doing this right now, even though it is the busiest time 
of the year for the United States Senate, so that we can have 
the jump on things when we get here next year, because that is 
when the action will be taken and this bill will have an 
opportunity to be one of the first in line.
    Protecting America from bioterrorism will require the best 
efforts of both government and the private sector. This hearing 
today will demonstrate that. It will help us to see what more 
needs to be done to make America as safe as possible from this 
threat.
    The legislation to enact President Bush's Project 
BioShield, which Congress passed into law in July, is an 
important first step towards securing our homeland and our 
citizens from a bioterror attack and its aftermath. I am proud 
to have cosponsored that legislation and I am committed to 
seeing the law improves our biodefense capabilities. My only 
regret is that it took more than a year for the full Senate to 
approve the bill after the HELP Committee reported it to the 
floor with unanimous support.
    Now, looking forward, it is critical for these two 
committees to work together to build upon Project BioShield. 
Project BioShield was never intended to address all of the 
obstacles to the development of bioterror countermeasures. It 
was intended simply to establish a stable and guaranteed source 
of Federal financing for the purchase of countermeasures 
developed by private industry, since most of these products 
don't even have other significant commercial applications.
    Now that we have established this financing mechanism, it 
is time that we address the other roadblocks that impede our 
progress on bioterrorism countermeasures. Chairman Hatch and 
Senator Lieberman have developed a bill that aims to address a 
wide variety of outstanding concerns that must be addressed, 
from liability protections to intellectual property incentives.
    I was looking forward to hearing Senator Lieberman. I am 
very impressed with the testimony. I was anxious to see how he 
was going to condense that into just a few minutes. It is one 
of the most extensive testimonies that I have seen presented, 
and, of course, that becomes a part of the record today, as 
well.
    I wholeheartedly agree with Senator Lieberman that we will 
not be able to address fully this threat without tapping the 
ingenuity that resides in these innovative industries. We need 
their input and involvement as we take the next steps toward 
protecting America from bioterrorism.
    Again, I thank the chairmen and ranking members of both the 
committees, as well, for coming together to refocus these 
committees on our biodefense capabilities and I look forward to 
working with the HELP Committee and the Judiciary Committee as 
we build this national biodefense.
    [The prepared statement of Senator Enzi appears as a 
submission for the record.]
    Senator Enzi. The panel that is before us, we have 
Christine Grant, who is Vice President of Government Relations 
with Aventis. It is the third-largest pharmaceutical company 
and one of the largest manufacturers of vaccines in the world. 
Aventis will provide their perspective on the remaining 
barriers to biodefense research and development.
    We have Alan Timmins, who is the CEO of AVI BioPharma, 
which is developing treatments for a wide variety of infectious 
diseases and potential bioterror agents, including hepatitis C, 
West Nile, SARS, dengue fever, and ebola, to provide a smaller 
company's perspective on BioShield.
    We have Kathleen Jaeger, the President and CEO of Generic 
Pharmaceutical Association. She will present the views of the 
generic pharmaceutical industry, and although generally 
supportive of including additional measures under BioShield, 
the Generic Pharmaceutical Association is concerned about some 
of the proposed patent and intellectual property provisions.
    We have Carlos Angulo, who is with Zuckerman Spaeder. He 
represents the Coalition for a Competitive Pharmaceutical 
Market. It is made up of large employers, such as General 
Motors, Caterpillar, and of health insurers, such as Blue 
Cross-Blue Shield. The Coalition seeks to ensure the timely 
availability of lower-cost generic drugs.
    We have Dr. John Bartlett, who is the Chief of the Division 
of Infectious Diseases at Johns Hopkins University School of 
Medicine. He is appearing on behalf of the Infectious Disease 
Society of America, IDSA. He will discuss why BioShield should 
be expanded to cover products intended to combat infectious 
disease generally.
    We thank you for being here. Ms. Grant?

STATEMENT OF CHRISTINE GRANT, VICE PRESIDENT, PUBLIC POLICY AND 
             GOVERNMENT RELATIONS, AVENTIS PASTEUR

    Ms. Grant. Good morning. Mr. Chairman, members of the 
committee, it is an honor for me to testify before you today 
about Project BioShield. I am here to represent one company, 
Aventis Pasteur. We are the largest company in the world 
devoted entirely to vaccine research, development, and 
manufacture. We produce more than a billion and a half doses of 
vaccine each year, protecting more than a half-a-billion people 
against 20 different diseases. We manufacture influenza vaccine 
and several other vaccines at our Swiftwater, Pennsylvania, 
plant here in the United States. We have had a variety of 
successes throughout the years.
    And we have also been partnering with the Federal 
Government in times of peace as well as conflict. We provided 
support of tetanus and diphtheria vaccine after the attack on 
the World Trade Center. We donated 85 million doses of smallpox 
vaccine to the Federal Government. We have always supplied the 
U.S. military, including military needs today in the war in 
Iraq. And we have responded already to more than one Federal 
request for biodefense measures, and therefore, we have some 
current experience on the subject. We have worked on global 
polio eradication and are actively involved in trying to 
develop a SARS and avian influenza vaccines.
    We have testified in support of a number of the principles 
in BioShield I and we are pleased that you recognized in that 
bill that the development of medical and biological products 
requires a number of years under the most favorable 
circumstances to bring a product to market. That is why the 
multi-year contracting provisions were so important in 
BioShield I. We now ask and hope that HHS and the staff will 
implement those multi-year provisions enthusiastically as we 
now begin to see the fruits of BioShield I.
    We also want to talk about the issue of having what are 
known as other transaction authority. Other transaction 
authority allows the HHS Secretary to contract with our 
biodefense companies for research, development, and 
manufacturing under one contract, under one roof. While the 
reports in BioShield I seem to indicate that other transaction 
authority was being provided, we would certainly encourage that 
that become explicitly considered in BioShield II. The reason 
is that, realistically, an established company like Aventis 
Pasteur not only does research and development, but we also 
emphasize the ongoing reliable manufacture of millions of doses 
of vaccine, so that when we have a satisfactory result at the 
research and development phase, we are in this business to 
continue to manufacture with HHS for HHS and the United States.
    Similarly, Project BioShield I provided HHS the streamlined 
procurement authorities to ensure that contracting process is 
familiar, is consistent with commercial business practices, and 
that was a very important element. We now hope that HHS and its 
staff will have the energy, the enthusiasm, and the empowerment 
to ensure that it is not business as usual, but rather 
BioShield will be implemented in a way that is familiar to 
large established commercial companies.
    Now, what remains to be done? Well, first, the issue of 
potential liability protection for entities such as us and 
other companies to get involved in this area is very, very 
important. For example, in our case, the absence of liability 
protection frankly was a major obstacle in our response to 
recent procurement by NIH for development of a next generation 
of anthrax vaccine. The absence of such liability protection 
continues to be a major hurdle for our company. We always try 
to obtain commercial insurance, but the practical reality today 
is that it is very unlikely to be able to obtain commercial 
insurance for projects of the nature contemplated by Project 
BioShield, and BioShield I was silent with respect to 
addressing liability.
    Now, it is true that the passage of the Homeland Security 
Act of 2002 radically altered the way in which the U.S. can go 
about promoting the development of technologies. The Safety Act 
also provided some protections. But as you will hear in more 
detail from other witnesses, the Safety Act has not yet been 
applied essentially after the fact or for products such as 
vaccines, which are designed to protect against the eventuality 
of a terrorism attack, but rather it seems to be limited in 
practice to only actual terrorism attacks, and my written 
testimony suggests ways that we feel that one could argue that 
the Safety Act extends to vaccine.
    Now, it is also worth noting that both the Secretary of HHS 
and DHS have already the authority to provide Federal indemnity 
to private contractors under Public Law 85-804. However, in our 
experience, use of such authority remains very, very rare. In 
March of 2003, President Bush revised Executive Order 10,789 
governing the use of this authority to provide indemnity under 
Public Law 85-804 in the context of anti-terrorism 
technologies.
    However, while HHS is currently using its authority in very 
limited circumstances, our problem in talking with HHS has been 
that the best understanding is that the agency is not providing 
such indemnification or other liability protection until, at 
best, a contract is awarded, and even then has not to date 
guaranteed that such protection will be forthcoming, even after 
an award is made. This, we are advised, has not been the same 
practice in other agencies and we would encourage working with 
you on that.
    It puts us, as an established company, in the untenable 
position of having to perform a contract bare of liability 
protection and assume what are really very unusually high legal 
risks for these kind of projects. Once a contract is awarded, 
frankly, the leverage has changed. It is very difficult for us. 
We must rely on the agency to follow through and decide whether 
to provide liability protections.
    So in summary, we would like to suggest that certainly 
going forward in BioShield II, that the authority for other 
transactions be offered and that we work together on liability 
protections, and I will be happy to answer any questions.
    Senator Enzi. Thank you.
    [The prepared statement of Ms. Grant appears as a 
submission for the record.]
    Senator Enzi. My apologies to Senator Reed. I didn't notice 
that he was here until I had already introduced the first 
witness. I will interrupt so that he can do an opening 
statement. Senator Reed?

 STATEMENT OF HON. JACK REED, A U.S. SENATOR FROM THE STATE OF 
                          RHODE ISLAND

    Senator Reed. Thank you very much, Mr. Chairman. We have a 
simultaneous hearing in the Armed Services Committee, so I will 
have to depart after my statement, but thank you.
    Let me join my colleagues in commending the chairman and 
the ranking member of both the Judiciary Committee and the HELP 
Committee for holding this hearing and thank the panelists for 
their expert testimony.
    This is a vitally important topic and I commend Senator 
Lieberman and Senator Hatch for their initiative in proposing 
their BioShield legislation. Since 9/11, we have taken dramatic 
steps in many different arenas, creating the Department of 
Homeland Security, conducting operations across the globe, in 
Afghanistan and Iraq, but I think we all agree we have to do 
much more when it comes to the threat of bioterror, chemical, 
and radiological countermeasures. The proposed legislation, I 
believe, is a step forward, following on BioShield I.
    One of the concerns I have, however, with the proposed 
legislation is that it doesn't recognize the critical role that 
the government can play in directing, encouraging and 
generating some of the research necessary for this approach. We 
are all familiar with commercial products that began through 
government research initiatives. The most famous is obviously 
the Internet, but satellites, explosive detection equipment, 
all these things started with government research and, frankly, 
government direction.
    The private sector has to play a critical role here, but I 
would like to work with the sponsors of the bill to ensure that 
we take full advantage of the capacities of the Federal 
Government in this process.
    One particular point that is critical when it comes to 
biotechnology and defenses against biological threats is that 
so much of this information is classified. So much of it is 
within the purview of the government because of its secrecy, 
because of the danger it poses if it gets out. So that, I 
think, is another element to consider.
    Certainly, we have to be able to incentivize the private 
sector to produce these materials in a manner that is 
appropriate and have them in supply in case of a threat.
    I look forward again to reading thoroughly all the 
testimony. Like Senator Enzi, I was hoping that Senator 
Lieberman would provide Cliff's Notes today for his extensive 
testimony--
    [Laughter.]
    Senator Reed. --but I will read the testimony. I thank the 
panel and I thank the chairman for this time.
    Senator Enzi. Thank you. I will mention to the panel that 
if you can condense your remarks to keep them within five 
minutes, as Senator Reed did, that it would be extremely 
helpful.
    I will mention also that the record will be left open so 
that if you want to make some additions to your testimony, that 
will be possible, and also so that members of the committees 
can submit questions in writing, which we hope you will also 
answer to add to the record.
    We will be kind of pressed for time today, because at 
11:30, we start doing stacked votes, which will continue until 
the intelligence reform bill is finished, which could be very 
late tonight without any break. Normally, we would recess for a 
vote and come back, but that is not going to be a possibility 
today.
    So with that, Mr. Timmins?

  STATEMENT OF ALAN P. TIMMINS, PRESIDENT AND CHIEF OPERATING 
         OFFICER, AVI BIOPHARMA, INC., PORTLAND, OREGON

    Mr. Timmins. Thank you, Senator. Thank you for inviting me 
to testify today. I am Alan Timmins, the President and Chief 
Operating Officer of AVI BioPharma. AVI is an Oregon-based 
company that was founded in 1980 under the premise that the 
gene is the target for drug intervention. We have developed our 
own proprietary technology, distinct from that of other 
companies, and we have run 11 clinical trials serving over 300 
patients without a single adverse event.
    We have also found, though, that our technology is 
particularly germane in the area of infectious disease and 
specifically to bioterror threats. Particularly, it is 
available in a rapid-response format, and that is perhaps best 
illustrated by an incident that took place last February at the 
U.S. Army Medical Research Institute of Infectious Disease, 
USAMRIID, at Fort Detrick, Maryland, where a post-doctorate 
researcher suffered a needle stick with a syringe that was 
filled with ebola. Now, Senator, as you know, ebola is a very 
lethal virus, and in fact, it is fatal in over 80 percent of 
the cases of people that contract it.
    The researchers at USAMRIID called my company and asked if 
we were able to offer some sort of help. We looked at publicly 
available databases, found a couple of relevant genes, put 
together, synthesized a drug, helped USAMRIID get an emergency 
IMD from the FDA, and delivered the drug to USAMRIID all within 
five days of receiving that request. That gives you an idea of 
the power of the technology.
    We also work in other infectious diseases, which we believe 
leads us to the ability to respond on a rapid response 
therapeutic basis to perhaps an engineered agent of bioterror, 
and that is important heading forward into the future. We also 
believe that we can address over 75 percent of the bioterror 
agents currently listed by the CDC.
    But the issue here isn't the capability of my company or 
any other company, large or small. The issue here is whether or 
not we will be able to enact the principles laid down by 
Senators Lieberman and Hatch in BioShield II. I would like to 
comment very briefly on those particular premises.
    In the area of tax incentives, a company like mine, a small 
company, we rely in a great degree on favorable capital markets 
to provide the funding to support our product development and 
to support the clinical trials necessary to get those products 
into the marketplace. The tax incentives sketched out by 
Senator Hatch and Senator Lieberman would be considered 
favorable by the capital markets, including the R&D 
partnership, which would allow usage of tax credits and 
business deductions on a timely basis, and also the capital 
gains incentive, which would encourage investment in smaller 
companies that are focused on biodefense.
    Also important are the patent incentives, particularly the 
``wild card'' patent incentive, which would allow for an 
extension of time for a relevant patent for a successful 
invention that is used in biodefense. That, along with a period 
of market exclusivity, is important also to investors in 
smaller companies that are developing biodefense mechanisms.
    More important, though, than these two incentives are the 
liability protection that is spelled out by Senator Lieberman 
and Senator Hatch.
    It is important that government gets back to being seen as 
a reliable, respectful, and responsible partner with industry 
and not in opposition to industry. The way that would happen is 
guarantees that intellectual property for companies, small 
companies, large companies, including patent protection, 
wouldn't be marched on or threatened by the government in the 
event of emergency. Rather, the government would work together 
in concert with the pharmaceutical industry and the 
biotechnological industry to bring the best biodefense 
mechanisms forward.
    Without that sort of protection, I would submit to you, 
though, Senator, that you won't find the best companies, the 
best and the brightest, working toward biodefense. You will 
find them staying away from that because they will perceive 
that the threat to their intellectual property is too great to 
take the risk to work with the government. That is 
unacceptable, in my opinion.
    In conclusion, to address the threat of bioterror, to take 
a major step forward, there are four things that need to be 
done. First, we need to effectively enact the provisions of 
BioShield I.
    Second, we need to provide appropriate tax incentives to 
foster investment in those companies that are going forward in 
biodefense.
    Third, we need to look for patent incentives that help 
companies such as ours that are developing mechanisms to fight 
bioterrorism.
    And fourth and most important, again, commit to liability 
protection. Commit to the government being a responsible and 
strong partner.
    Senator I believe that those measures taken together would 
pay for themselves over a number of years. But most 
importantly, they will foster the innovative spirit of both the 
pharmaceutical industry and the biotech industry, and I would 
submit to you that that innovative spirit, when all is said and 
done, is going to be our most potent weapon in the war against 
bioterror.
    I am willing to take your questions at any point. Thank 
you.
    Senator Enzi. Thank you very much. Excellent job.
    [The prepared statement of Mr. Timmins appears as a 
submission for the record.]
    Senator Enzi. Ms. Jaeger?

STATEMENT OF KATHLEEN D. JAEGER, PRESIDENT AND CHIEF EXECUTIVE 
    OFFICER, GENERIC PHARMACEUTICAL ASSOCIATION, ARLINGTON, 
                            VIRGINIA

    Ms. Jaeger. Thank you. Chairman Gregg, Chairman Hatch, and 
Senator Enzi, I am Kathleen Jaeger, President and CEO of 
Generic Pharmaceutical Association. On behalf of GPhA and its 
members, thank you for this opportunity to testify on the ways 
to strengthen BioShield I.
    GPhA and its member companies strongly support the stated 
policy goal of both BioShield I and S. 666, to ensure that 
America has the adequate supply of drugs and other products 
that would serve as countermeasures to bioterrorism attacks. 
Indeed, many of our members are already making substantial 
contributions to this end. However, new policies in this area 
must be balanced against the very real costs.
    Mr. Chairman Congress took a significant step toward 
national preparedness with the passage of BioShield I this 
summer. We believe that the new law represents a sound 
foundation from which to build. As you know, BioShield I 
provided many of the tools needed to stimulate research and 
development of countermeasures. In many ways, Project I 
exemplifies what can result when the Federal legislative 
process works best by producing bipartisan legislation that 
utilizes a private-public partnership and research procurement 
and contracting to meet as major challenge head on. And 
already, we are seeing representatives of the pharmaceutical 
industry, the Federal Government, academia responding to the 
new laws, incentives, and call for action.
    Nevertheless, even prior to enacting BioShield I, questions 
arose about the possible shortcomings, especially with respect 
to inadequate product liability protections. S. 666 is designed 
to address these concerns. Four notable provisions look 
particularly promising in this regard.
    First, the limitation of product liability exposure to 
manufacturers of desired countermeasures.
    Two, the provision of additional tax incentives to 
encourage investment in novel counter-bioterrorism products.
    And third, the provision of FDA fast track review to 
expedite approval and availability of new countermeasures.
    And fourth, additional Federal financial support for these 
initiatives.
    However, we are alarmed that S. 666 includes provisions 
that reach into every medicine cabinet in America by 
effectively eliminating consumers' access to affordable generic 
products of everyday medicines. More specifically, the 
definition of what drug products would be eligible to receive 
an array of excessive and expensive incentives is 
extraordinarily, and we hope inadvertently, broad.
    For example, the definitions could cover such ubiquitous 
pathogens as staph, E. coli, and other causes of common, 
everyday infections. While this may seem ridiculous, it could 
be shown that drugs widely used, such as Zoloft for depression, 
Plavix for heart attacks, Effexor XR for anxiety, Imitrex for 
migraines, could play a role in treating the symptoms of a 
bioterrorism attack and these would be eligible for additional 
protection under S. 666.
    In addition, four provisions of S. 666, if allowed to 
stand, would unnecessarily and excessively penalize consumers 
to the tune of tens of billions of dollars in lost 
pharmaceutical savings. They would institute new loopholes that 
would extend additional and expensive market exclusivity 
provisions for brand products already on the market. Mr. 
Chairman these financial benefits would be on top of the other 
generous incentives already available.
    As more fully detailed in our written testimony, these 
provisions, individually and collectively, will create 
devastating effects on the current health care system and 
undermine the balance of Hatch-Waxman amendments by, one, 
penalizing generic drug applicants with an additional five 
years of market exclusivity for merely filing applications as 
required by Federal law, and another five years if an applicant 
fails to successfully challenge a patent even though another 
generic company has prevailed and can bring their product to 
market.
    Two, providing open-ended and unlimited patent extensions 
for all countermeasure drug products.
    And three, needlessly extending current market 
exclusivities to ten years for something as simple as a 
conversion from a tablet to an extended release dosage form.
    And four, granting a two-year wild card patent extension 
that can be applied to patents and products that are wholly 
unrelated to any countermeasure and which can be stacked one 
upon the other to indefinitely delay generic entry.
    For example, under S. 666, a company like Pfizer could 
merely perform a small animal study on one of their 
commercially available antibiotics and that company could 
receive a windfall to extend the exclusivity of one of their 
blockbuster products for two years. Suppose Pfizer used its 
wild card on America's most recommended cholesterol-reducing 
drug, Lipitor. Pfizer's return would be a minimum of a $14 
billion windfall.
    Now, suppose that Pfizer performed a second animal study, 
either on the same antibiotic or on a different agent. They 
could claim that a $3 billion product, Zoloft, could get an 
additional two years of market exclusivity. And to that, again, 
there would be an additional $6 billion windfall, clearly to 
the detriment of patients and their families suffering from 
mental illness.
    Mr. Chairman, as you can see, these four provisions taken 
to their logical conclusion could affect consumer access to and 
the affordability of most everyday medicines. All four of these 
provisions would inflate drug prices, impose major obstacles to 
the entry of generic drugs into the market, and worsen the 
crisis faced by every American who must pay for all or a 
substantial portion of his or her prescription drugs, including 
the millions of uninsured and older Americans. They serve 
little sound purpose, and unlike the other four positive 
provisions I earlier outlined, certainly would not strengthen 
BioShield I and better achieve its goals.
    In conclusion, Mr. Chairman, the broad eligibility 
definitions and the excessive and unnecessary market 
protections of S. 666 give a blank check to PHRMA payable 
against the financial and health care interests of America, 
America's workers, businesses, and taxpayers. We think these 
provisions would be extraordinarily expensive and would do 
little to accelerate research and production of truly 
innovative products. Congress was right to reject, at least not 
include, such counterproductive policies when you passed 
BioShield I earlier this summer.
    And lastly, GPhA and our members stand ready to provide 
whatever support we can to respond to your challenge to 
research, produce, and stock, and be ready to distribute new 
and effective bioterrorism countermeasures.
    Thank you for the opportunity to testify. I would be happy 
to answer any questions.
    Senator Enzi. Thank you.
    [The prepared statement of Ms. Jaeger appears as a 
submission for the record.]
    Senator Enzi. Mr. Angulo?

STATEMENT OF CARLOS ANGULO, PARTNER, ZUCKERMAN SPAEDER LLP, ON 
BEHALF OF THE COALITION FOR A COMPETITIVE PHARMACEUTICAL MARKET

    Mr. Angulo. Good morning, Senator Enzi. My name is Carlos 
Angulo and I am here to testify on behalf of CCPM, the 
Coalition for a Competitive Pharmaceutical Market, on S. 666, 
the BioShield II bill. Thank you for the opportunity to appear 
before you today.
    CCPM is an organization of employers, insurers, generic 
drug manufacturers, and others committed to improving consumer 
access to affordable pharmaceuticals and promoting a vigorous, 
competitive prescription drug market. CCPM supports public 
policies that facilitate timely access to affordable 
pharmaceuticals. The Coalition, of course, is also absolutely 
committed to assisting Federal, State, and local governments 
and the American people in their efforts to develop quick, 
effective, and accessible responses to bioterrorism.
    The Coalition's membership is broad, including numerous 
prominent purchasers of pharmaceuticals, such as General Motors 
Corporation, Caterpillar, Inc., and Eastman Kodak Company. On 
behalf of the Coalition, I would like to share with the 
committees today our experience regarding prescription drug 
cost increases and to underscore our belief that in its current 
form, S. 666 would dramatically delay generic drugs from coming 
to market and cause a crippling increase in prescription costs 
for America's employers, health plans, and consumers.
    By way of background, large and small businesses, 
consumers, unions, governors, the Federal Government, and 
health plans throughout the nation are aggressively attempting 
to manage soaring prescription drug costs. These expenditures 
are growing at annual rates of up to 20 percent and are 
unsustainable. Current pharmaceutical cost trends are 
increasing premiums, raising copayments, pressuring reductions 
in benefits, and undermining the ability of businesses to 
compete. CCPM members seeking to continue to provide 
prescription drug coverage to employees and subscribers face a 
tremendous challenge in light of these skyrocketing 
pharmaceutical costs.
    For example, General Motors, the largest private provider 
of health care coverage in the nation, insuring over 1.1 
million workers, retirees, and their families, spent over $1.3 
billion last year on prescription drugs. Despite GM's use of 
state-of-the-art management techniques that assure the most 
appropriate and cost-effective use of prescription drugs, its 
pharmaceutical bill continues to grow at a rate of 12 percent 
to 16 percent a year, more than quadrupling the general 
inflation rate.
    Similarly, Eastman Kodak Company, which insures 150,000 
covered lives, spends 31 percent of its health care dollars on 
prescription drugs. Kodak spent roughly $99 million on drugs in 
2003 and its costs are growing each year.
    The experience of insurers is no different. The 41 Blue 
Cross and Blue Shield plans that collectively provide health 
care coverage for 91 million Americans, represented in the 
Coalition by the Blue Cross and Blue Shield Association, are 
continuing to experience increases in prescription drug costs. 
The BCBS Federal Employee Program, for example, had drug 
increases over the last year of 9.67 percent. BCBSA expects 
these costs to continue to impact the affordability of 
premiums.
    Such drug cost increases are driven by multiple factors, 
including higher utilization, direct-to-consumer 
advertisements, drug price increases, and especially delayed 
generic competition. If S. 666 passes in its current form, 
these costs will escalate dramatically and America will have a 
health care bill it cannot afford to pay.
    The Coalition strongly supports legislation aimed at 
improving our ability to respond to terrorist uses of chemical 
or biological weapons. There can be no denying that the events 
of September 11 forever changed the way in which we work and we 
live. Today, we recognize that in order to protect our 
families, our friends, and our employees, we must be prepared 
for every type of situation.
    For this reason, we wholly support the goals of the Project 
BioShield Act of 2004, or BioShield I, which went into effect 
just this summer. We also recognize that the effort to prepare 
our nation against terrorist threats should include incentives 
to stimulate the development and production of drugs and other 
countermeasures, and therefore we support certain provision of 
S. 666, such as the provisions for tax credits, fast track Food 
and Drug Administration review of applications for 
countermeasures, protection against product liability suits, 
and the creation of a terror weapon countermeasures purchase 
fund.
    It is also clear, however, that the goal of encouraging a 
response to bioterrorism must be balanced against the overall 
costs to American consumers and an already overburdened health 
care system. Unfortunately, as currently drafted, S. 666 has 
many unnecessary provisions that will increase costs without 
significantly benefitting the anti-terrorism effort. 
Specifically, there are four provisions in the legislation that 
would seriously hinder employers' ability to provide affordable 
health care to their employees and that would, in fact, deny 
public access to affordable versions of the countermeasure 
products that the bill seeks to make available to the American 
public.
    First, S. 666's wild card exclusivity provision would give 
brand pharmaceutical companies a broad mandate to extend a 
patent for two years on virtually any drug they choose, even if 
it is completely unrelated to terrorism. This extension of 
brand company monopolies would force consumers and employers to 
pay billions of dollars in prescription drug costs beyond what 
they would pay if generic drugs were permitted to enter the 
market as provided under current law without significantly 
advancing any anti-terrorism goals.
    Second, Section 5(f) of S. 666 expands by up to seven years 
the non-patent statutory exclusivity period for 
countermeasures. This change dramatically alters the careful 
policy balance struck by Congress under the 1984 Hatch-Waxman 
Act and last year's amendments to that legislation. S. 666 
alters this balance by extending broadly, in certain cases by 
over 200 percent, brand company monopolies at the expense of 
consumer access to generic drugs.
    Third, Section 5(c) of S. 666 would provide patent 
extensions for the full period taken to complete regulatory 
review for countermeasures. In certain cases, this provision 
would go so far as to reinstate patents on drugs that have been 
off-patent, forcing generic alternatives off the market. This 
bill would only exacerbate the problems of unsustainable health 
care costs and the growing number of uninsured Americans.
    Fourth, Section 5(f) of S. 666 penalizes the generic 
industry for merely following the law in submitting generic 
applications with required patent certifications by providing 
that a generic company that submits such an application for a 
generic version must wait an additional five years for FDA 
approval beyond what is required under current law. This again 
contradicts the very intent of the Hatch-Waxman Act.
    In short, and I will conclude, Senator, each of these four 
provisions of S. 666 standing alone could cost America's 
employers, insurers, and consumers billions of dollars without 
substantially assisting in the anti-terrorism cost. Each of 
these provisions has been rejected before by the Senate and by 
Congress. As innovators, patent holders and competitors in the 
world market, the Coalition members respect the integrity and 
value of intellectual property protection, but not at the 
expense of consumer protections and lower drug prices for 
consumers and for our employees and retirees.
    Thank you. I will be happy to answer any questions.
    Senator Enzi. Thank you.
    [The prepared statement of Mr. Angulo appears as a 
submission for the record.]
    Senator Enzi. Dr. Bartlett?

    STATEMENT OF JOHN G. BARTLETT, M.D., CHIEF, DIVISION OF 
    INFECTIOUS DISEASES, JOHNS HOPKINS UNIVERSITY SCHOOL OF 
   MEDICINE, ON BEHALF OF THE INFECTIOUS DISEASE SOCIETY OF 
                            AMERICA

    Dr. Bartlett. Thank you for the opportunity. I represent 
the Infectious Disease Society of America. It is an 
organization of about 7,000 or 8,000 physicians, most of whom 
do what I do, which is take care of patients with infectious 
disease.
    I am here on behalf of the Society representing patients. 
We don't really have a commercial interest in anything. We are 
mostly worried about the availability of drugs in the event of 
a crisis, and we see an evolving crisis and that is the reason 
that we are particularly pleased to be invited.
    The Institute of Medicine described the current era as a 
period in which there is a great probability of what they call 
a perfect microbial storm, and actually, there have been a 
bunch of them. SARS or avian flu or monkey pox or anthrax, any 
of these would be called potentially devastating infectious, 
especially if they hit the wrong place at the wrong time, and 
some already have.
    What we are particularly worried about at the moment is the 
escalating problem of increasing resistance of the bacteria 
that we deal with every day, which is pretty predictable and it 
is shown on this visual here. The increase in some of the most 
common bacteria that we deal with every day in the hospital, we 
know that is happening because that has been an act of nature 
that we have dealt with ever since penicillin was brought on 
board in 1950.
    But that is accompanied by a very distressing decrease in 
the number of antibiotics that we have available. So the number 
of antibiotics that we have is going down, down, down. In fact, 
in 2003, we had no new antibacterial agents introduced into the 
marketplace, which is really extraordinary.
    Now, our Society has gone around and talked to ten of the 
major pharmaceutical manufacturers and we have done a lot of 
research in this area in terms of the pipeline and what we 
found is that many of the companies are either going out of 
business, and the rest of them that aren't going out of the 
antibiotic business are downsizing that operation. So when we 
look at the pipeline, for example, there are something like 503 
new molecular entities in the pipeline, new drugs, and out of 
those, five are new antibacterial agents.
    So when we look down the line, we see that miracles of the 
last 50 years, which have increased longevity by 30 years, is 
simply going to go away. So we are very worried about that 
problem of the dearth of antibiotics, new antibiotics, to deal 
with emerging crisis.
    I did want to dispel a couple of what I think are common 
misperceptions. One misperception is that the NIH or other 
government agencies plays an important role in drug discovery. 
That is really not true. I expect everybody in this room has 
taken an antibiotic in the last ten years, took one that was 
discovered by a pharmaceutical company, developed by a 
pharmaceutical company, and brought to market by a 
pharmaceutical company. They have the history of having done it 
and certainly have the skill to do it.
    Another misconception that is common is that we are 
actually not so bad right now, because if I have sinusitis, I 
can get a drug for it and it will take care of it. The fact is, 
we deal in an environment where we deal with serious infections 
that are very resistant. We are pulling drugs off the shelves 
that we haven't used in 20 years. Some of them are for this 
methicillin-resistant staph aureus that we are encountering 
very much more frequently and some of it is for this bug called 
acinetobacter, which is common in Iraq and now very common in 
the United States hospitals.
    So we are worried about our ability to be able to keep up 
with the bugs at a time when the amount of available 
antibiotics is decreasing. And when you talk to the drug 
companies, it is very clear why they are going in this 
direction. You take an antibiotic for a week and you take 
Lipitor for the rest of your life. I mean, the economics are 
simple. It is not hard to figure out why they are doing what 
they are doing.
    So I think what I would like to urge is in the framework of 
BioShield II, there be the possibility of responding to a 
microbial storm with the understanding that we don't know how 
that is going to appear. It might be a brand new bug, like 
SARS. It might be a really bad resistant bug, like 
acinetobacter. It might be a manufactured resistant organism, 
like anthrax. I am saying we don't know where it is going to 
come from, but we are pretty sure it is going to happen.
    The other thing I would mention is that we now have to plan 
five to eight years down the line because that is the average 
time it takes to develop a new drug. So we are not talking 
about 2005, which is pretty bad in itself. We are talking about 
2010. Thank you.
    Senator Enzi. Thank you very much.
    [The prepared statement of Dr. Bartlett appears as a 
submission for the record.]
    Senator Enzi. This is a very impressive panel. One of the 
great perks of being in the United States Senate is the 
opportunity to learn about all these things that we probably 
wouldn't even have cared about before and some of the things 
that we never wanted to know about. It is a tremendous 
education. I think we probably pick up about a college course a 
month around here.
    Again, we are under a little bit of a time constraint, so I 
do have a few questions that I want to ask right now. 
Hopefully, you will give me rather brief answers and expand on 
them later as you get other questions from us, as well. I know 
that several members of the panel wanted to ask questions based 
on the testimony that they received already and some that was 
presented today, so I will start with a few questions here.
    Ms. Grant, BioShield provides no protection against the 
risk of litigation stemming from possible adverse events. How 
much of a risk does this present in the case of a biodefense 
product that is not required to undergo Phase 3 clinical 
trials, and in the event of emergency may not even be FDA 
approved?
    Ms. Grant. This is a very, very big risk, and in a sense, 
it is almost a non-starter because the realities of the 
commercial markets today here and around the world are that we 
just can't get commercial liability protection anywhere 
approaching reasonable prices. So it is a very, very serious 
problem. It has a chilling effect and our companies are 
watching very closely how liability protection will be 
addressed.
    Senator Enzi. Again, on all of these questions, any of you 
that want to answer them, we will accept answers in writing on 
them, due to our limited amount of time.
    Mr. Timmins, you run a small company based on the other 
side of the country. I am from Wyoming, and every business in 
Wyoming that is headquartered in Wyoming is a small business. I 
know that the Federal Government sometimes needs to be reminded 
that small companies don't know how to navigate Washington in 
the same way that big companies do. From your perspective, what 
does HHS need to do to ensure that small companies like yours 
understand how to work with the government on Project 
BioShield?
    Mr. Timmins. Senator, that is a terrific question and 
probably one that should be the subject of a hearing in and of 
itself, because I can tell you, it is a hard running river and 
it is going in the wrong direction. You work your hardest. You 
try your best. But really, the key is to have terrific 
representation, as we are fortunate to in the State of Oregon 
and the people of the great State of Wyoming are, as well, 
great representation in the Senate offices so that the 
legislative assistants can help you navigate those waters. That 
has been our best help going forward.
    And then we find, like Senator Gregg's staff, very helpful, 
just finding friends on, as we call it, a friendship tour, when 
we come back and talk to the various Senators and ask for their 
help, their assistance, what is the next step in the way as we 
are trying to get the message out.
    Senator Enzi. Thank you. It sounds like a good topic for 
the Small Business Committee that I am also on, so we will 
pursue that.
    Ms. Jaeger, you had that chart that was over there that I 
don't think is part of the record here. It was almost too small 
for me to be able to read from here. So if you would provide us 
with copies of that, I would really appreciate it.
    For both you and Mr. Angulo, if you could provide us with 
some more detail on how those provisions might be revised that 
you mentioned that would place an extra constraint particularly 
on generic drugs, that would be helpful.
    Ms. Jaeger. We would be pleased to.
    Senator Enzi. Wording is always a difficulty around here, 
particularly if we don't have expertise in the area that we are 
working in--which does not stop us from working on something, 
but--
    [Laughter.]
    Mr. Angulo. We would be glad to.
    Ms. Jaeger. We would be happy to, Senator.
    Senator Enzi. Again, we will have some additional questions 
for you, particularly concerning those specific points that you 
raised.
    Dr. Bartlett, you called for a BioShield-like set of 
incentives to spur the development of new antibiotics. You 
specifically suggest that we need a guaranteed pool of money. 
However, you note in your testimony that there is a major 
civilian market for antibiotics. We don't have such a market 
for--although you made the distinction between Lipitor and 
antibiotics, as well, and then there is an even more limited 
market for bioterror countermeasures, which is why we created 
Project BioShield in the first place. Why would we need a 
guaranteed pool if we have a civilian market for antibiotics?
    Dr. Bartlett. Well, first of all, I think there are a 
couple parts of that. One is that if we have a major problem 
with a microbe such as the one I mentioned, acinetobacter, 
there is a big problem for us trying to take care of patients 
in the hospital. There is not enough of a market for any 
pharmaceutical company to ever develop a drug for 
acinetobacter. It will never happen.
    The antibiotic market is between here and here. It is 
sinusitis and bronchitis and so forth. The other markets in 
medicine are much more profitable than the antibiotic market. 
So the civilian part of this is simply not going to go forward 
on the basis of what we perceive to be the biggest problems.
    Senator Enzi. Thank you. I want to thank the entire panel 
and again encourage you to answer the questions that you will 
be receiving. Those answers will be a part of the record and 
will be shared with all of our colleagues.
    While we are changing panels, the ranking member of the 
Judiciary Committee, Senator Leahy, can provide any statement 
that he wishes.
    Senator Leahy. My questions will be submitted for the 
record. I thank that all the panelists who have come here. Of 
course, we are in major debates on the Senate floor. This is 
probably the last week we will be in session until the lame 
duck. As the leaders, both Republican and Democratic, pointed 
out to all committee chairmen, this will be not a good week to 
hold hearings because nobody could be here. We are all, as I 
said, on the floor. So I just wanted you to know that it is not 
that we are not interested in what you have to say.
    I also want to remark on how much has been left undone by 
the Senate. Some things, we don't get done. However, by law, we 
are required to pass a budget by April 30 and now, in October, 
there is no sign of it. By law, we are supposed to pass the 13 
appropriations bills by September 30. We passed one. I guess 
somebody just pulled out a calendar and suddenly realized where 
we were.
    So the empty chairs up here are not a sign of disrespect to 
you. I appreciate all of you being here, and I think you are 
going to have a lot of questions submitted. I am just going to 
give a short opening statement, Mr. Chairman.
    Senator Enzi. We will have them stay there for a moment 
while you do your statement. Senator Schumer may be on his way 
down, too.

  STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE 
                        STATE OF VERMONT

    Senator Leahy. The focus of today's joint hearing is an 
important one. That is why I wish it had been done during 
normal Senate time because it is an important one. I think in 
an increasingly uncertain world, the American people deserve 
assurance that government and industry are doing all they can 
to protect their health and well-being.
    But this morning, that question is far from clear. As we 
meet here to discuss how to prepare our nation for the dire 
possibility of a catastrophic bioterrorist attack, the likes of 
which I hope we will never see, we learn that we are really not 
prepared to meet the biological threat that is here every year 
since I was born, and long before that. Of course, that is flu 
season.
    I had hoped that the Bush administration would have learned 
their lesson from last year's experience, when we saw a major 
flu vaccine shortage. Now, we see health officials across the 
country, including in my home State of Vermont, asking healthy 
people just to forego their flu shot. I think the American 
people are right to challenge this vaccine rationing. They 
deserve an answer from the administration, why it didn't plan 
and prepare better. If they can't be prepared for the seasonal 
flu, which happens every single year, what does that say about 
the ability to prepare for biological terrorist attacks?
    I will admit there is some interest in this. Like most 
people, I at one time or another in my life had a case of the 
flu. But unlike most people in this country, I have been the 
subject of a biological attack. There are two members of 
Congress, only two, that actually were threatened with a 
biological attack, Senator Daschle and myself. People who 
touched--touched--the envelope addressed to me, died. I think 
about the families of people who were crippled and stay 
crippled from that. I think of the people who died, simply 
because they were doing their job trying to deliver a letter to 
me. And, of course, my family and I think about what might have 
happened if I opened that letter. That was two of us up here. 
It could have been a whole lot more people. I am speaking, of 
course, of the anthrax attack.
    But back to the flu, one of the primary problems with the 
flu vaccine that is highlighted by the administration's 
inability to deliver sufficient flu vaccines appears to be the 
concentration of producers. Market concentration is something 
the government can speak to. I believe the brand pharmaceutical 
industry is too concentrated. They fiercely lobby to extend 
their patents to prevent generic pharmaceuticals from giving 
consumers more affordable medicine. A huge amount of money is 
spent in this town for that.
    Our constituents and, I think, members on both sides of the 
aisle need to ask why this country is so dependent on just two 
suppliers for this important vaccine. With all the 
pharmaceutical suppliers in this country, why is our government 
relying on a foreign supplier, which has now just been put out 
of business by the British government?
    And so I would hope the big brand pharmaceutical companies 
would demonstrate their capability to respond to this crisis by 
answering the call of this flu vaccine problem rather than 
pushing for patent extensions and windfall profits. It is 
probably too late this year, but they ought to be thinking 
about next year. I hope we can guarantee that neither I nor any 
other person in the government or in private industry will 
receive an anthrax attack like the deadly one I had, but we 
have to assume that 280 million Americans will be subject to 
getting the flu next year.
    So I would hope we could address the potential crisis, make 
agreements to license and produce the vaccine the world needs. 
I would hope we would not find ourselves in this position 
again.
    I will put into the record the rest of my statement. I am, 
among other things, pleased that the Congress took action to 
enact the Project BioShield Act of 2004. I applaud 
appropriately Senators on both sides of the aisle on that, and 
I will put that statement in the record. I know they will be 
eager to read it, Mr. Chairman as always, and I thank you for 
being here.
    Senator Enzi. Thank you very much, and thank you for making 
your statement a part of the record since we are under the 
voting time constraint today where we have to start the series 
of votes at 11:30 and we have one more panel to go.
    [The prepared statement of Senator Leahy appears as a 
submission for the record.]
    Senator Enzi. With that, I will turn it over to Senator 
Schumer for a statement or questions.

 STATEMENT OF HON. CHARLES E. SCHUMER, A U.S. SENATOR FROM THE 
                       STATE OF NEW YORK

    Senator Schumer. Thank you, Mr. Chairman. I first want to 
thank both Senators Hatch and Gregg for calling this joint 
hearing about a very important homeland security issue.
    There is no doubt that Project BioShield is an important 
piece of legislation and it provided a reasonable and needed 
incentive to encourage research and development of life-saving 
countermeasures to be used in the event of or to protect us 
from biological, chemical, nuclear attack, God forbid them all. 
We may need, though, to look at a few tweaks to make those 
incentives work like they were meant to work.
    I understand that some of my colleagues may be drafting new 
bills. I look forward to seeing them. But I am deeply disturbed 
by the approach taken in a bill that is already out there which 
is identified as BioShield II. That is S. 666, and I am going 
to focus on that here today.
    The bill contains patent provisions which undo almost every 
one of the important pro-consumer Hatch-Waxman reforms that my 
colleague, Chairman Gregg, and I fought so hard to have 
included in the Medicare bill. Its approach could indefinitely 
delay access to generic versions of all major blockbuster drugs 
and cost consumers billions--not millions, not hundreds of 
millions, billions of dollars.
    To me, this amendment is, and I will restrain my language 
uncharacteristically, but it is awful, and it is taking a noble 
purpose and then sneaking in the wishes of the pharmaceutical 
industry that have nothing to do with protecting us from 
biological, chemical, or nuclear, and I will do everything to 
stop the entire bill if this provision stays in.
    Let me describe it. The most egregious part of these patent 
windfalls is the so-called wild card patent extension. This 
provision says that if a company does research on a potential 
countermeasure, they would be rewarded with a two-year patent 
extension that they could slap on any drug they wanted. Do $20 
million of research on one thing and get a $3 billion benefit 
on another. Who are we kidding? This is not intended to help 
biological research, which we desperately need. It is intended 
to give the drug companies even more.
    I would hope that the people who put this in have learned 
their lesson. They tried to come up with a pharmaceutical bill, 
adding it into Medicare to help people. Do you hear President 
Bush talking about that bill in his election? Nope. Do you hear 
my Republican colleagues talking about that bill in their 
election? Nope. Why? Because they gave everything away to the 
big pharmaceutical industry. The idea that Medicare couldn't 
negotiate with the drug companies ruined the bill and it became 
a political albatross, and yet nobody seems to learn and we are 
doing the same thing right here.
    Now, the bill says, you will say, the reward should only go 
to smaller drug companies, but it is the Secretary of Homeland 
Security's authority to waive this requirement, at least at the 
moment--maybe it will change--from the same administration that 
won't do anything--anything--that the pharmaceutical industry 
doesn't want.
    One might think that in order for a company to get this 
reward, they would actually have to discover and produce a new 
life-saving, epidemic-stopping countermeasure, but that is far 
from the case. The company doesn't have to discover a new drug. 
They can do a test on one they are already marketing. They 
don't have to produce the drug for the government's stockpile. 
They don't even have to get the drug approved as a 
countermeasure and they can still get the multi-billion-dollar 
reward.
    So the incentives in this bill make the American public pay 
billions of dollars to drug companies for no guaranteed return. 
No businessman would make that investment. Why are we?
    Let me give you a sense of what this could mean for 
blockbuster drugs. Two extra years on Zocor, the popular 
cholesterol medicine, would mean a $9 billion windfall for 
Merck. Two extra years on Zyprexa, a drug used for 
schizophrenia, $6 billion for Lilly. Two extra years on 
Prevacid, blockbuster ulcer medicine, $8 billion for TAP 
Pharmaceuticals.
    If we add up the value of just a one-year patent extension 
on the nine top drugs, just one year, nine top drugs, $31.5 
billion, all to the pharmaceutical industry. That is more than 
the entire NIH budget, all of it completely allowed in S. 666, 
all of it with no return, no guaranteed return for the 
consumer.
    The way I understand this provision, at least as it is 
drafted now, a company could get multiple wild card extensions 
and put them all on the same blockbuster drug, one after the 
other after the other. You could have these drugs or others, 
Lipitor or whatever, extended for years. This is Washington at 
its worst.
    That is all I can say. I am infuriated by this. Let me ask 
the American people, do you think the only way that we can 
secure our homeland is to pay tens of billions of dollars to 
the pharmaceutical industry? It is like ransom. We are not 
going to do it.
    I would urge the people of this noble bill, and I certainly 
understand the need to give people incentives to invest in 
these things. I felt the same way when it comes to vaccinations 
and other things, you know, all the lawsuits and everything 
else that go too far, but this is not the way to do it.
    With that, I would like to ask Mr. Angulo a question. Now, 
your Coalition represents some of the largest payers for health 
care in America, major employers, Kodak in my State, General 
Motors, which has a lot of employees in my State. What would be 
the impact of enacting the type of patent extensions described 
here today on the ability of these companies to provide quality 
health care for their employees at an affordable price?
    Mr. Angulo. The impact would be enormous and it would be 
enormously negative. Already, it is difficult enough under the 
current situation, the current landscape, to provide affordable 
health care to our employees, the Coalition's employees, the 
retirees, all the individuals that they are responsible for. To 
add this on top of it would, I think, create, as I said in my 
testimony, an unsustainable situation.
    Senator Schumer. Thank you. My next question is for Ms. 
Jaeger. All of us agree that it is vital to enhance our medical 
defenses against deadly weapons of mass destruction, but we 
have to be careful to use our efforts wisely, our resources 
wisely. Aren't there more cost-effective ways to enhance the 
production of new vaccines and medication than providing wild 
card patent extensions that could cost billions of dollars 
every year? Isn't driving up the cost of prescriptions the last 
thing we should be doing right now?
    Ms. Jaeger. Yes, Senator. We would agree that putting the 
burden on Americans who need medicine the most is not the right 
way of going and that really what should happen is that 
taxpayers should actually have to bear this burden equally 
among all.
    And so, therefore, we would suggest that people consider 
full funding of these programs, perhaps providing more funding 
over to NIH and also doing very aggressive partnerships with 
private entities. We also think, again, another piece that 
would actually accelerate some development in this area is a 
product liability exemption for manufacturers.
    So we think that the current environment, all the wonderful 
incentives that we provide to the pharmaceutical industry 
today, which include tax credits, market exclusivity, patent 
extensions, along with BioShield I and along with perhaps some 
other added concepts like product liability and additional tax 
credits, really would be the best way of going, and so that we 
can make sure that this nation is actually very secure and at 
the same time, we don't destroy our current health care 
environment, which is also in a crisis right now.
    Senator Schumer. Thank you. Now, I have spoken strong 
language. If anybody would like, any of the other panelists 
would like to put in a counterword, I would like to hear what 
they have to say in defense of this specific provision. Does 
anyone want to defend it? No? Then my time has expired, Mr. 
Chairman. Thank you. Let the record show no one wanted to 
defend it, at least on this panel.
    Senator Enzi. Before the record shows that, while this 
panel is moving, I will make a comment on that.
    Senator Schumer. Go ahead.
    Senator Enzi. I do want the Senator from New York to 
realize that this is a bipartisan bill, and while all of the 
accusations went toward the Republicans on it, that one of the 
two drafters of this is from your side of the aisle. I think 
that there was a good bipartisan effort in coming up with this. 
Nobody said that it was a perfect bill at this point and there 
is a chance to work on it. I would provide a lot more rebuttal 
if we had more time, but we have another panel that we need to 
have and we are going to start voting at 11:30. Three people at 
five minutes doesn't get us done by 11:30.
    Senator Schumer. I would just say, Mr. Chairman, my goal is 
to get this provision out of the bill, and whatever side of the 
aisle that comes from and whoever's side of the aisle put it 
in, it ought to be taken out right away. As I understand it, my 
colleague, Senator Kennedy, agrees with my thoughts on these 
issues.
    Senator Enzi. And I did ask Ms. Jaeger and Mr. Angulo to 
provide us with some wording that would make that a more fair 
provision, but to keep in mind that we are trying to come up 
with some incentives for them to do these very short-term 
products. Dr. Bartlett gave an excellent explanation of the 
difference between Lipitor, which is for life, and antibiotics, 
which are for a week--
    Senator Schumer. Mr. Chairman?
    Senator Enzi. --and could have added this as being for the 
moment.
    Senator Schumer. Right. Let me make the record clear. I am 
all for incentives to do this and I think you need them. I 
think no one in their right mind would want to give an 
incentive of $2 billion for a $10 million or $20 million--for 
an incentive that warranted a $10 or $20 million investment.
    Senator Enzi. I understand that. I would also like to 
mention that the flu vaccine was mentioned, and I want to 
mention that Chiron was shut down by British regulators. I will 
be interested to see what that was. But the shortage does point 
out the need for new incentives and liability reform so that we 
aren't surprised by companies and so that we can have more 
companies in the United States who are involved in this 
process.
    Our next panel is Mr. Jeff Kushan, who is a partner with 
the firm of Sidley, Austin, Brown and Wood, representing 
clients on a wide range of intellectual property matters, 
licensing, policy, and litigation.
    Mr. John Clerici, who is a partner with the firm of 
McKenna, Long and Aldridge, with a focus on homeland security, 
particularly in the policy and legislative areas of how the 
government procures anti-terrorism technology from the private 
sector.
    And Ms. Patricia Greenberg, a registered nurse who is the 
coordinator of the Nurse Alliance of New York State, which was 
established in September 2002. Ms. Greenberg has been a nurse 
since 1991 and has been a Service Employees International Union 
activist for over ten years.
    Mr. Kushan?

STATEMENT OF JEFFREY P. KUSHAN, PARTNER, SIDLEY, AUSTIN, BROWN 
                         AND WOOD, LLP

    Mr. Kushan. Thank you, Mr. Chairman, and thank you to all 
the other members of the committee for giving me this 
opportunity to testify before you today on the issue of market 
incentives to encourage development of countermeasures to 
respond to bioterrorism pathogens and threats. I am appearing 
today in response to an invitation to share my views on certain 
market exclusivity proposals contained in the Lieberman-Hatch 
bill. More importantly, I am testifying today in my personal 
capacity and the testimony that I am offering is my own.
    During the deliberations that led to BioShield I, Congress 
appreciated the significant challenges in inducing the private 
sector to invent and bring to market new countermeasures to 
treat counterterror pathogens. The most significant of these 
challenges is there is no assured or consistent market for new 
products that might be developed. A company could thus spend 
millions of dollars, assume huge risks, only to find there is 
no market for its product or that that market is extremely 
limited.
    Congress has partially addressed this challenge or this 
problem through its assured procurement opportunities and also 
by expediting the approval procedure for new products, but 
these measures are only going to go so far. Government 
procurement of products is both limited in its scale and 
subject to a number of risks that make this type of market 
opportunity less attractive than many other market 
opportunities that the biotech and pharmaceutical industry 
faces.
    The true challenge of any legislative package is to 
convince the capital markets that the market opportunities 
associated with developing countermeasures are comparable to 
those for other types of drug development. A truly viable 
biodefense industry is one that will engage in new product 
discovery and development that is motivated by the opportunity 
for market success rather than by only through government 
subsidies.
    As I note in my written testimony, the biotech and 
pharmaceutical industry markets are extremely market savvy. The 
industries are very market savvy, and more importantly, the 
markets are very savvy about the biotech industry. I tend to 
focus on the biotech industry because there is where you see 
most of the capacity for really high-risk innovative activity. 
Everybody is contributing to the environment, but those are the 
companies you really have to focus on inducing to shift their 
resources.
    The formula that the market sees as necessary for success 
for a new venture is not only that a company has come up with a 
new product, but that it is going to have assured market 
exclusivity and meaningful market exclusivity once it finally 
reaches a market with that product. Meaningful market 
exclusivity in these industries means that the innovator will 
only face technology competition and not price competition for 
a reasonable period after it launches its product.
    By technology competition, I mean you will see other 
products entering the market to treat that type of disease or 
disorder, but that you won't have intense intermediate price 
competition in other parties selling the same product. The 
inducement to technology competition is what we are aiming for 
with incentive. We want more products, more approaches, more 
interventions, and that is what we have to figure out how to 
create.
    Investors that participate in the biotech industry accept 
higher risks of failure because of the higher possible return 
on their investment, and that risk that they all tolerate is 
the risk of product failure. But they can't tolerate--and I 
deal with venture capital companies who evaluate opportunities 
and I deal with companies who have intellectual property that 
they are trying to get venture capital folks to give them money 
to support--they all focus on market exclusivity. They all want 
certainty. And they all want to have a finite number of risks 
that they face. What they can't face as a risk is the political 
uncertainty and other types of uncertainty that might destroy a 
market once they finally reach it with a new product.
    The Lieberman-Hatch proposals that have been discussed 
before have some innovative approaches to tackling the 
challenge and creating significant and effective new incentives 
for developing countermeasures. I am going to talk about three 
of these briefly.
    The first is the question of patent term restoration. There 
is currently an authority in the Hatch-Waxman Act for companies 
to obtain credit for the time they spend developing and getting 
their drugs through the FDA process. Under that equation, there 
is a partial credit system. You don't get the entire credit. 
This is something which should be solved or addressed in the 
system. Small companies that develop these products should be 
able to get the full period of exclusivity corresponding to the 
regulatory period.
    The second issue is this patent bonus that has already been 
the subject of some discussion today, and I think this is a 
creative approach that Congress is grappling with. Certainly, 
there are a lot of variables in how you express it and pin it 
down, but fundamentally, it is an interesting concept that is 
similar to the pediatric exclusivity concept. Pediatric 
exclusivity is an option that if a company does pediatric 
clinical investigations, it can get six months of additional 
exclusivity. That mechanism has addressed a problem that the 
market hasn't been able to solve. The market is not going to 
encourage people to do clinical investigations in pediatric 
populations, so they had to come up with a broader incentive 
that addressed that market shortfall. The patent incentive that 
is being discussed here might do that by giving an alternate 
funding opportunity or an opportunity for return investment 
that is not there by the potential of the drug itself.
    And finally, in the Lieberman-Hatch bill, there are a 
number of ideas for market exclusivity, data exclusivity, 
following approval of a new countermeasure. That would extend 
those periods out.
    One point, and I will end on this. The one challenge for 
this entire class of products is that these products may never 
be used and the window of time following approval is fairly 
short, as was mentioned earlier, in some cases only three years 
after a product is approved for marketing. We might not have a 
need for using that product three years after a product is 
approved. And so some measure that will encompass out into the 
future and assure market exclusivity is warranted and I invite 
the members of Congress to come up with the best type of 
package to induce this type of innovation. Thank you, Mr. 
Chairman.
    Senator Enzi. Thank you.
    [The prepared statement of Mr. Kushan appears as a 
submission for the record.]
    Senator Enzi. Mr. Clerici?

    STATEMENT OF JOHN M. CLERICI, PARTNER, McKENNA, LONG & 
                ALDRIDGE, LLP, WASHINGTON, D.C.

    Mr. Clerici. Yes. Thank you, Senator Enzi. I want to thank 
Chairman Gregg, Chairman Hatch, Senator Kennedy, and Senator 
Leahy for taking on this issue, and most significantly, Senator 
Lieberman with Senator Hatch, who had the foresight to address 
this issue soon after the attacks of 2001 and bring the 
legislation to the forefront.
    I also want to thank Secretary Thompson and Secretary 
Ridge. They have been on the forefront of implementing this 
legislation. Their offices have been open. Assistant Secretary 
Stu Simonson has been willing to work with industry to 
understand how this process should be implemented and he 
deserves credit for that openness.
    Finally, I would like to applaud the passage of BioShield 
in this regard as a positive step in the right direction. The 
country is significantly safer because of the passage of 
BioShield and Congress and the administration deserve the 
credit for that.
    The goal now is to build upon that success and address the 
major issues that are preventing biomedical countermeasures 
from coming to market.
    Make no mistake, liability concerns are preventing 
biomedical countermeasures from entering the government's 
stockpile. We have worked in my capacity at the law firm with 
clients on the issue of product liability related to sales to 
the Federal Government. I helped with my firm and others on the 
passage of the SAFETY Act and its implementation, so I 
understand the provisions of that Act and how they apply to 
this market.
    We also recognize that working on contracts for our 
clients, for SARS vaccine, for avian flu vaccine, for smallpox 
vaccine, for next-generation anthrax vaccine, for anthrax 
therapeutics, smallpox antivirals, botulism vaccines, and 
antidotes for ricin and cyanide, that these companies that are 
undertaking these efforts will get to a point where they will 
not sell to the Federal Government unless their shareholders 
are adequately protected on the liability issue. We have to 
recognize that this environment is in the post-Sarbanes-Oxley 
world and there are obligations that public companies have to 
mitigate these risks.
    Currently, the threat derived from products in the 
countermeasures produced under BioShield are fundamentally 
different than the risks encountered by a typical drug company. 
They are meant to stop, to interdict, to prevent an unknowable 
criminal act of terrorism. The terrorists could engineer the 
toxin around the vaccine or around the countermeasure. The 
terrorist could use it in an entirely different way than we 
ever imagined. We have seen their creativity obviously three 
years ago to take no steps in that way.
    We recognize that these products, by their very nature, can 
only be implemented and tested using an animal role. We can't 
expose healthy humans to these toxins. We have to rely on a lot 
of predictive models, on Phase 3 clinical trials, and a great 
deal of luck, and that is important to recognize that that 
threat is different.
    As my co-panelist has already pointed out, these 
pharmaceutical drugs and biomedical countermeasures will be 
likely stockpiled for years. We are not sure where they are 
going to be deployed, or when they are going to be deployed, 
and we pray to God that they never are deployed. But they are 
sitting on the shelf to be administered by someone other than 
the pharmaceutical, other than the public health system maybe 
in the event of an emergency, and that risk is too great for 
companies to bear.
    Currently, there are only two options to deal with this 
liability protection for the broad scope of biodefense 
countermeasures, Public Law 85-804, which was already touched 
upon by a prior witness, and the SAFETY Act. Public Law 85-804 
has been used in the donation of smallpox vaccine by a couple 
of companies, and HHS has been willing to reach out and use 
that authority when it is necessary. But recognize that that 
authority still creates a litigation model. The government, if 
you will, acts as a super-insurer. It could be years before 
judgments are rendered and payments are made to compensated 
unintended victims of this act of terrorism.
    And most importantly, as already has been pointed out, HHS 
will not negotiate these provisions in advance of award. 
Companies are faced to allocate scarce resources and use 
shareholder money for a contract that, if they win, they might 
not be able to accept because of the liability concerns, and 
that has happened, absolutely, since the year 2001.
    The SAFETY Act, which again is a very powerful piece of 
legislation, is not a compensation act. It removes the 
liability as a matter of law and creates a presumption of 
dismissal from a lawsuit. It does apply to countermeasures that 
stop or prevent a terrorist attack, but it doesn't apply to the 
liability in its current form in the way it has been 
implemented for those dangers prior to the terrorist attack, 
such as those created by a vaccine with animal model testing 
and limited research and development.
    And most importantly, HHS has not linked the SAFETY Act 
effectively to procurement. It is a two-step process. You get 
the award, you apply for the SAFETY Act. The uncertainty that 
these companies face cannot be passed to their shareholders as 
responsible corporate citizens.
    The way to address this issue is to clarify the SAFETY Act 
to make clear that it does and can apply to liability that 
occurs prior to an act of terrorism, and I would urge you to 
also consider coupling the SAFETY Act with a compensation 
scheme. There is an effective compensation scheme already in 
law for smallpox vaccine under the Homeland Security Act of 
2002 and the Smallpox Act of 2003 that Senator Gregg and 
Congressman Burr worked on. That measure could be easily 
extended to biomedical countermeasures and coupled with the 
SAFETY Act, the questions involving the concerns of the 
liability and whether or not that is adequate protection, 
coupled with the SAFETY Act, would certainly be an improvement 
over the status quo.
    Finally, Mr. Chairman, I do comment in my testimony on 
antitrust provisions, as well. There are provisions in existing 
law that do not require Congressional action that Congress 
should urge the administration to use to discuss how this 
market can be better developed in the incentives that industry 
needs without fear of antitrust violations.
    I am open to your questions. Thank you.
    Senator Enzi. Thank you.
    [The prepared statement of Mr. Clerici appears as a 
submission for the record.]
    Senator Enzi. Ms. Greenberg?

  STATEMENT OF PATRICIA B. GREENBERG, R.N., ON BEHALF OF THE 
         SERVICE EMPLOYEES INTERNATIONAL UNION, AFL-CIO

    Ms. Greenberg. Good morning, Senator Enzi. My name is 
Patricia Greenberg and I have been a registered nurse since 
1980, though I thank you for taking ten years off my age.
    [Laughter.]
    Ms. Greenberg. I have worked in critical care, coronary 
care, intensive care, operating room, and neonatal intensive 
care. Currently, I am the Executive Director of the New York 
State Nurse Alliance of 1199 SEIU. On behalf of the Service 
Employees International Union, I thank you for this opportunity 
to testify.
    I also want to thank the sponsors of S. 666 for honoring 
Kathy Nguyen. Kathy was a member of my local union who died 
from her exposure to anthrax.
    SEIU is the nation's largest organization representing 
health care workers, with over half of our 1.7 million members 
made up of nurses, doctors, EMTs, and other occupations within 
the health care sector. Many of these employees work in 
occupations that would be defined as first responders in the 
event of a terrorist attack.
    As nurses, we want to do everything in our power to respond 
to, treat, and care for any patient who may be a victim of a 
terrorist event. We have reviewed S. 666 and are supportive of 
the broad principles of the legislation, to encourage the 
development of new countermeasures to protect all of us from 
such threats.
    In particular, we have noticed how S. 666 is quite 
comprehensive in protecting the drug and other biotech 
companies who produce countermeasures from liability. In sharp 
contrast, we are alarmed that there is no mention of providing 
protections for the front-line volunteers working to protect 
our national security if they suffer as a direct result of the 
implementation of any of these countermeasures.
    Frankly, we have been down this road before. The Homeland 
Security Act of 2002 provided blanket liability protections for 
smallpox vaccine manufacturers, but no protections for front-
line health care workers, their patients, or the public. S. 666 
sadly mimics many of the same serious flaws contained in the 
Bush administration's failed smallpox vaccine program.
    This bill is of even more concern when you consider that it 
is premised on the expectation that there will not be adequate 
time to do full safety testing on these newly developed 
measures. As a result, we fear that, once again, nurses and 
other first responders will be quite hesitant to roll up their 
sleeves to volunteer when they learn of the bill's 
deficiencies.
    It is not right or even logical to go to great lengths to 
protect the manufacturers that create the countermeasures from 
liability and then ignore the safety needs of the first 
responders and their patients in the event of adverse 
reactions. I can assure you that the best countermeasures in 
the world will not be effective if health care workers and 
their patients do not have confidence in the safety of these 
countermeasures and if those injured can expect no more than a 
``get well'' card from their elected leaders.
    You may recall that in December of 2002, President Bush 
unveiled a smallpox vaccination plan to inoculate 500,000 
health care workers within 30 days and ten million more public 
safety workers in six months. Six months prior to this 
announcement, a wide range of organizations told the CDC that 
the program would likely fail if serious gaps in patient and 
worker production were not addressed. We all know the result of 
that initiative. Today, less than one-half of one percent of 
the ultimate goal of ten million workers have been vaccinated 
in the program later called a fiasco in a Washington Post 
editorial.
    I now that we can and must do better with S. 666. The 
example of the recent past points the way. Specifically, SEIU 
believes that the following nine elements must be included.
    A requirement that first responders be educated about the 
risks and benefits of any new countermeasure before 
implementation.
    A requirement that workers are free to decline newly 
produced vaccines or other countermeasures not sufficiently 
tested without fear of workplace discrimination.
    Free and confidential medical screening for volunteering 
will be provided in any vaccine or drug trial to screen out 
those with preexisting medical conditions.
    That patients be informed of the risks of any 
countermeasures that could impact their safety.
    That the Federal Government will oversee the monitoring of 
any adverse effects in volunteers who receive countermeasures.
    That any first responder volunteer who becomes ill due to 
any countermeasure does not face loss of income.
    That free medical care be provided to those who volunteer 
if they become ill from any countermeasure.
    That first responders be provided with an explanation of 
any new job duties resulting from the implementation of the 
countermeasures.
    And, finally, contrary to how smallpox vaccine was 
administered, require that any new vaccines or other 
medications that utilize needles be administered with safe 
needles as required under the Needlestick Safety and Prevention 
Act of 2000.
    I want to recognize and thank you, Senator Enzi, for 
sponsoring the Needlestick Safety Act. Thanks to this visionary 
action, there is no need for any tainted needlestick to ever 
threaten any health care worker again.
    Thank you, and I would be glad to respond to any questions.
    [The prepared statement of Ms. Greenberg appears as a 
submission for the record.]
    Senator Enzi. Again, I want to thank this panel for some 
very detailed and useful information and critique of the bill. 
I wish we had some time for some extensive questions on it. We 
will be submitting questions to you in writing to get your 
response to make a part of the record, although the detailed 
comments that you gave are extremely useful.
    I want to thank in their absence Senator Hatch and Senator 
Gregg and Senator Leahy and Senator Kennedy for holding this 
hearing. There was a lot of misgiving about what would happen 
with it when it was just prior to an election, particularly a 
Presidential election. I think, for the most part, we have 
avoided that kind of thing, because this is to get information 
for something that will begin after the first of the year but 
give our staff now something to really dig their teeth into and 
to get additional answers in response to your concerns and the 
concerns of the panelists.
    One of the things that I have discovered around here is 
that we pretty much agree on about 80 percent of any bill. 
Unfortunately for America, it is the 20 percent that we don't 
agree on that we go to the floor and fight about, and that is 
one of the things that I have learned from working with Senator 
Kennedy on some of the things like the Needlestick bill, that 
when we work together, we can get some amazing things done. We 
will be watching out for the safety. That is why it is a joint 
committee on this.
    We will be looking to see what incentives will work while 
best preserving competitiveness. I think that the testimony 
today shows the immense need for liability protection and 
worker protection.
    With that, I will leave the record open and we will be 
getting questions to you to complete the record.
    I would also like to include in the record the prepared 
statement of Senator Kennedy.
    I thank everybody for their participation today. The 
hearing is adjourned.
    [Whereupon, at 11:40 a.m., the committees were adjourned.]
    [Questions and answers and submissions for the record 
follow.]

[GRAPHIC] [TIFF OMITTED] T6812.001

[GRAPHIC] [TIFF OMITTED] T6812.002

[GRAPHIC] [TIFF OMITTED] T6812.003

[GRAPHIC] [TIFF OMITTED] T6812.004

[GRAPHIC] [TIFF OMITTED] T6812.005

[GRAPHIC] [TIFF OMITTED] T6812.006

[GRAPHIC] [TIFF OMITTED] T6812.007

[GRAPHIC] [TIFF OMITTED] T6812.008

[GRAPHIC] [TIFF OMITTED] T6812.009

[GRAPHIC] [TIFF OMITTED] T6812.010

[GRAPHIC] [TIFF OMITTED] T6812.011

[GRAPHIC] [TIFF OMITTED] T6812.012

[GRAPHIC] [TIFF OMITTED] T6812.013

[GRAPHIC] [TIFF OMITTED] T6812.014

[GRAPHIC] [TIFF OMITTED] T6812.015

[GRAPHIC] [TIFF OMITTED] T6812.016

[GRAPHIC] [TIFF OMITTED] T6812.017

[GRAPHIC] [TIFF OMITTED] T6812.018

[GRAPHIC] [TIFF OMITTED] T6812.019

[GRAPHIC] [TIFF OMITTED] T6812.020

[GRAPHIC] [TIFF OMITTED] T6812.021

[GRAPHIC] [TIFF OMITTED] T6812.022

[GRAPHIC] [TIFF OMITTED] T6812.023

[GRAPHIC] [TIFF OMITTED] T6812.024

[GRAPHIC] [TIFF OMITTED] T6812.025

[GRAPHIC] [TIFF OMITTED] T6812.026

[GRAPHIC] [TIFF OMITTED] T6812.027

[GRAPHIC] [TIFF OMITTED] T6812.028

[GRAPHIC] [TIFF OMITTED] T6812.029

[GRAPHIC] [TIFF OMITTED] T6812.030

[GRAPHIC] [TIFF OMITTED] T6812.031

[GRAPHIC] [TIFF OMITTED] T6812.032

[GRAPHIC] [TIFF OMITTED] T6812.033

[GRAPHIC] [TIFF OMITTED] T6812.034

[GRAPHIC] [TIFF OMITTED] T6812.035

[GRAPHIC] [TIFF OMITTED] T6812.036

[GRAPHIC] [TIFF OMITTED] T6812.037

[GRAPHIC] [TIFF OMITTED] T6812.038

[GRAPHIC] [TIFF OMITTED] T6812.039

[GRAPHIC] [TIFF OMITTED] T6812.040

[GRAPHIC] [TIFF OMITTED] T6812.041

[GRAPHIC] [TIFF OMITTED] T6812.042

[GRAPHIC] [TIFF OMITTED] T6812.043

[GRAPHIC] [TIFF OMITTED] T6812.044

[GRAPHIC] [TIFF OMITTED] T6812.045

[GRAPHIC] [TIFF OMITTED] T6812.046

[GRAPHIC] [TIFF OMITTED] T6812.047

[GRAPHIC] [TIFF OMITTED] T6812.048

[GRAPHIC] [TIFF OMITTED] T6812.049

[GRAPHIC] [TIFF OMITTED] T6812.050

[GRAPHIC] [TIFF OMITTED] T6812.051

[GRAPHIC] [TIFF OMITTED] T6812.052

[GRAPHIC] [TIFF OMITTED] T6812.053

[GRAPHIC] [TIFF OMITTED] T6812.054

[GRAPHIC] [TIFF OMITTED] T6812.055

[GRAPHIC] [TIFF OMITTED] T6812.056

[GRAPHIC] [TIFF OMITTED] T6812.057

[GRAPHIC] [TIFF OMITTED] T6812.058

[GRAPHIC] [TIFF OMITTED] T6812.059

[GRAPHIC] [TIFF OMITTED] T6812.060

[GRAPHIC] [TIFF OMITTED] T6812.061

[GRAPHIC] [TIFF OMITTED] T6812.062

[GRAPHIC] [TIFF OMITTED] T6812.063

[GRAPHIC] [TIFF OMITTED] T6812.064

[GRAPHIC] [TIFF OMITTED] T6812.065

[GRAPHIC] [TIFF OMITTED] T6812.066

[GRAPHIC] [TIFF OMITTED] T6812.067

[GRAPHIC] [TIFF OMITTED] T6812.068

[GRAPHIC] [TIFF OMITTED] T6812.069

[GRAPHIC] [TIFF OMITTED] T6812.070

[GRAPHIC] [TIFF OMITTED] T6812.071

[GRAPHIC] [TIFF OMITTED] T6812.072

[GRAPHIC] [TIFF OMITTED] T6812.073

[GRAPHIC] [TIFF OMITTED] T6812.074

[GRAPHIC] [TIFF OMITTED] T6812.075

[GRAPHIC] [TIFF OMITTED] T6812.076

[GRAPHIC] [TIFF OMITTED] T6812.077

[GRAPHIC] [TIFF OMITTED] T6812.078

[GRAPHIC] [TIFF OMITTED] T6812.079

[GRAPHIC] [TIFF OMITTED] T6812.080

[GRAPHIC] [TIFF OMITTED] T6812.081

[GRAPHIC] [TIFF OMITTED] T6812.082

[GRAPHIC] [TIFF OMITTED] T6812.083

[GRAPHIC] [TIFF OMITTED] T6812.084

[GRAPHIC] [TIFF OMITTED] T6812.085

[GRAPHIC] [TIFF OMITTED] T6812.086

[GRAPHIC] [TIFF OMITTED] T6812.087

[GRAPHIC] [TIFF OMITTED] T6812.088

[GRAPHIC] [TIFF OMITTED] T6812.089

[GRAPHIC] [TIFF OMITTED] T6812.090

[GRAPHIC] [TIFF OMITTED] T6812.091

[GRAPHIC] [TIFF OMITTED] T6812.092

[GRAPHIC] [TIFF OMITTED] T6812.093

[GRAPHIC] [TIFF OMITTED] T6812.094

[GRAPHIC] [TIFF OMITTED] T6812.095

[GRAPHIC] [TIFF OMITTED] T6812.096

[GRAPHIC] [TIFF OMITTED] T6812.097

[GRAPHIC] [TIFF OMITTED] T6812.098

[GRAPHIC] [TIFF OMITTED] T6812.099

[GRAPHIC] [TIFF OMITTED] T6812.100

[GRAPHIC] [TIFF OMITTED] T6812.101

[GRAPHIC] [TIFF OMITTED] T6812.102

[GRAPHIC] [TIFF OMITTED] T6812.103

[GRAPHIC] [TIFF OMITTED] T6812.104

[GRAPHIC] [TIFF OMITTED] T6812.105

[GRAPHIC] [TIFF OMITTED] T6812.106

[GRAPHIC] [TIFF OMITTED] T6812.107

[GRAPHIC] [TIFF OMITTED] T6812.108

[GRAPHIC] [TIFF OMITTED] T6812.109

[GRAPHIC] [TIFF OMITTED] T6812.110

[GRAPHIC] [TIFF OMITTED] T6812.111

[GRAPHIC] [TIFF OMITTED] T6812.112

[GRAPHIC] [TIFF OMITTED] T6812.113

[GRAPHIC] [TIFF OMITTED] T6812.114

[GRAPHIC] [TIFF OMITTED] T6812.115

[GRAPHIC] [TIFF OMITTED] T6812.116

[GRAPHIC] [TIFF OMITTED] T6812.117

[GRAPHIC] [TIFF OMITTED] T6812.118

[GRAPHIC] [TIFF OMITTED] T6812.119

[GRAPHIC] [TIFF OMITTED] T6812.120

[GRAPHIC] [TIFF OMITTED] T6812.121

[GRAPHIC] [TIFF OMITTED] T6812.122

[GRAPHIC] [TIFF OMITTED] T6812.123

[GRAPHIC] [TIFF OMITTED] T6812.124

[GRAPHIC] [TIFF OMITTED] T6812.125

[GRAPHIC] [TIFF OMITTED] T6812.126

[GRAPHIC] [TIFF OMITTED] T6812.127

[GRAPHIC] [TIFF OMITTED] T6812.128

[GRAPHIC] [TIFF OMITTED] T6812.129

[GRAPHIC] [TIFF OMITTED] T6812.130

[GRAPHIC] [TIFF OMITTED] T6812.131

[GRAPHIC] [TIFF OMITTED] T6812.132

[GRAPHIC] [TIFF OMITTED] T6812.133

[GRAPHIC] [TIFF OMITTED] T6812.134

[GRAPHIC] [TIFF OMITTED] T6812.135

[GRAPHIC] [TIFF OMITTED] T6812.136

[GRAPHIC] [TIFF OMITTED] T6812.137

[GRAPHIC] [TIFF OMITTED] T6812.138

[GRAPHIC] [TIFF OMITTED] T6812.139

[GRAPHIC] [TIFF OMITTED] T6812.140

[GRAPHIC] [TIFF OMITTED] T6812.141

[GRAPHIC] [TIFF OMITTED] T6812.142

[GRAPHIC] [TIFF OMITTED] T6812.143

[GRAPHIC] [TIFF OMITTED] T6812.144

[GRAPHIC] [TIFF OMITTED] T6812.145

[GRAPHIC] [TIFF OMITTED] T6812.146

[GRAPHIC] [TIFF OMITTED] T6812.147

[GRAPHIC] [TIFF OMITTED] T6812.148

[GRAPHIC] [TIFF OMITTED] T6812.149

[GRAPHIC] [TIFF OMITTED] T6812.150

[GRAPHIC] [TIFF OMITTED] T6812.151

[GRAPHIC] [TIFF OMITTED] T6812.152

[GRAPHIC] [TIFF OMITTED] T6812.153

[GRAPHIC] [TIFF OMITTED] T6812.154

[GRAPHIC] [TIFF OMITTED] T6812.155

[GRAPHIC] [TIFF OMITTED] T6812.156

[GRAPHIC] [TIFF OMITTED] T6812.157

[GRAPHIC] [TIFF OMITTED] T6812.158

[GRAPHIC] [TIFF OMITTED] T6812.159

[GRAPHIC] [TIFF OMITTED] T6812.160

[GRAPHIC] [TIFF OMITTED] T6812.161

[GRAPHIC] [TIFF OMITTED] T6812.162

[GRAPHIC] [TIFF OMITTED] T6812.163

[GRAPHIC] [TIFF OMITTED] T6812.164

[GRAPHIC] [TIFF OMITTED] T6812.165

[GRAPHIC] [TIFF OMITTED] T6812.166

[GRAPHIC] [TIFF OMITTED] T6812.167

[GRAPHIC] [TIFF OMITTED] T6812.168

[GRAPHIC] [TIFF OMITTED] T6812.169

[GRAPHIC] [TIFF OMITTED] T6812.170

[GRAPHIC] [TIFF OMITTED] T6812.171

[GRAPHIC] [TIFF OMITTED] T6812.172

[GRAPHIC] [TIFF OMITTED] T6812.173

[GRAPHIC] [TIFF OMITTED] T6812.174

[GRAPHIC] [TIFF OMITTED] T6812.175

[GRAPHIC] [TIFF OMITTED] T6812.176

[GRAPHIC] [TIFF OMITTED] T6812.177

[GRAPHIC] [TIFF OMITTED] T6812.178

[GRAPHIC] [TIFF OMITTED] T6812.179

[GRAPHIC] [TIFF OMITTED] T6812.180

[GRAPHIC] [TIFF OMITTED] T6812.181

[GRAPHIC] [TIFF OMITTED] T6812.182

[GRAPHIC] [TIFF OMITTED] T6812.183

[GRAPHIC] [TIFF OMITTED] T6812.184

[GRAPHIC] [TIFF OMITTED] T6812.185

[GRAPHIC] [TIFF OMITTED] T6812.186

[GRAPHIC] [TIFF OMITTED] T6812.187

[GRAPHIC] [TIFF OMITTED] T6812.188

[GRAPHIC] [TIFF OMITTED] T6812.189

[GRAPHIC] [TIFF OMITTED] T6812.190

[GRAPHIC] [TIFF OMITTED] T6812.191

[GRAPHIC] [TIFF OMITTED] T6812.192

[GRAPHIC] [TIFF OMITTED] T6812.193

[GRAPHIC] [TIFF OMITTED] T6812.194

[GRAPHIC] [TIFF OMITTED] T6812.195

[GRAPHIC] [TIFF OMITTED] T6812.196

[GRAPHIC] [TIFF OMITTED] T6812.197

[GRAPHIC] [TIFF OMITTED] T6812.198

[GRAPHIC] [TIFF OMITTED] T6812.199

[GRAPHIC] [TIFF OMITTED] T6812.200

[GRAPHIC] [TIFF OMITTED] T6812.201

[GRAPHIC] [TIFF OMITTED] T6812.202

[GRAPHIC] [TIFF OMITTED] T6812.203

[GRAPHIC] [TIFF OMITTED] T6812.204

[GRAPHIC] [TIFF OMITTED] T6812.205

[GRAPHIC] [TIFF OMITTED] T6812.206

[GRAPHIC] [TIFF OMITTED] T6812.207

                                 
