[Senate Hearing 109-210]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-210
 
     ROUNDTABLE DISCUSSION: PREPARING A NATIONAL BIODEFENSE: S. 975

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

                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON BIOTERRORISM AND PUBLIC
                          HEALTH PREPAREDNESS

                                 OF THE

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

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON



EXAMINING S. 975, TO PROVIDE INCENTIVES TO INCREASE RESEARCH BY PRIVATE 
SECTOR ENTITIES TO DEVELOP MEDICAL COUNTERMEASURES TO PREVENT, DETECT, 
IDENTIFY, CONTAIN, AND TREAT ILLNESSES, INCLUDING THOSE ASSOCIATED WITH 
  BIOLOGICAL, CHEMICAL, NUCLEAR, OR RADIOLOGICAL WEAPONS ATTACK OR AN 
                      INFECTIOUS DISEASE OUTBREAK

                               __________

                             JULY 21, 2005

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

                    U.S. GOVERNMENT PRINTING OFFICE
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                   MICHAEL B. ENZI, Wyoming, Chairman

JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee                CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
RICHARD BURR, North Carolina         BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia              JAMES M. JEFFORDS (I), Vermont
MIKE DeWINE, Ohio                    JEFF BINGAMAN, New Mexico
JOHN ENSIGN, Nevada                  PATTY MURRAY, Washington
ORRIN G. HATCH, Utah                 JACK REED, Rhode Island
JEFF SESSIONS, Alabama               HILLARY RODHAM CLINTON, New York
PAT ROBERTS, Kansas

               Katherine Brunett McGuire, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                 ______

      Subcommittee on Bioterrorism and Public Health Preparedness

                 RICHARD BURR, North Carolina, Chairman

JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee                CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
MIKE DeWine, Ohio                    BARBARA A. MIKULSKI, Maryland
JOHN ENSIGN, Nevada                  JEFF BINGAMAN, New Mexico
ORRIN G. HATCH, Utah                 PATTY MURRAY, Washington
PAT ROBERTS, Kansas                  JACK REED, Rhode Island
MICHAEL B. ENZI, Wyoming (ex 
officio)

                     Robert Kadlec, Staff Director

                David C. Bowen, Minority Staff Director

                                  (ii)

  




                            C O N T E N T S

                               __________

                               STATEMENTS

                        Thursday, July 21, 2005

                                                                   Page
Burr, Richard, Chairman, Subcommittee on Bioterrorism and Public 
  Health Preparedness, opening statement.........................     1
Lieberman, Joseph I., a U.S. Senator from the State of 
  Connecticut....................................................     2
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, 
  opening statement..............................................     5
Schumer, Hon. Charles E., a U.S. Senator from the State of New 
  York...........................................................     9

                         ADDITIONAL INFORMATION

Statements, articles, publications, letters, etc.:
    Kennedy, Hon. Edward M., a U.S. Senator from the State of 
      Massachusetts, prepared statement..........................    19

                                 (iii)

  


     ROUNDTABLE DISCUSSION: PREPARING A NATIONAL BIODEFENSE: S. 975

                              ----------                              


                        THURSDAY, JULY 21, 2005

                                       U.S. Senate,
            Subcommittee on Bioterrorism and Public Health 
  Preparedness, Committee on Health, Education, Labor, and 
                                                  Pensions,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:09 a.m., in 
room 430, Dirksen Senate Office Building, Senator Burr, 
chairman of the subcommittee, presiding.
    Present: Senators Burr, Hatch, Lieberman, and Schumer.

                   Opening Statement of Senator Burr

    Senator Burr. This hearing will come to order. Senator 
Lieberman, welcome.
    Senator Lieberman. Thank you.
    Senator Burr. We also welcome Senators Hatch and Schumer.
    At this time I would ask unanimous consent that all 
members' statements be included in the record, as well as the 
full statements of today's witnesses be included in the record, 
and without objection, so ordered.
    Again, I would like to thank you and our colleagues, 
Senator Lieberman, for being here.
    This is the second formal Roundtable that we have had, and 
I am hopeful that we are growing close to the end of a very 
long process, but one that was needed greatly.
    As we begin to examine all the aspects of S. 975, we 
certainly have the ability to tap the talents and the knowledge 
of two people who have been extremely engaged in the process, 
Senator Hatch and Senator Lieberman. For scheduling reasons, 
Senator Gregg is unable to join us today, but as we stated when 
we started this process, we had been charged by Senator Enzi to 
look at all the pieces of legislation that had been introduced 
as it related specifically to BioShield, to try to figure out 
what we collectively have learned over the past several years, 
and to try to make sure that we incorporated all the great 
ideas that existed not just on the Hill but around the country.
    I can tell you that we have exhausted every opportunity to 
reach out in a public venue, in a private venue, to individuals 
that we thought had something to contribute. I truly believe 
that at the end of this process we will have left no stone 
unturned to try to learn something that possibly we did not 
know. I am convinced that as we go through the final pieces, 
and that is, trying to assemble a piece of legislation, the 
same individuals will be included in that process. This is not 
one that will be written in the dark of night or in a closed 
room. It is one that will be written based upon the input of 
experts, and as we move along that process, I believe that we 
will have a bill that addresses the concerns that are expressed 
in S. 975, the concerns that are expressed by people on the 
front line, the concerns that every American has about their 
security and the threat that is out there.
    With that, I want to thank Chairman Enzi and Senator 
Kennedy. Without their cooperation we would not have been able 
to go through this process, and they have been extremely 
helpful. Both are unable to be with us today.
    For us to move to the next step, it is absolutely vital 
that we get the insight from you, Senator Lieberman and Senator 
Hatch, as it relates to the specific pieces of S. 975 that you 
have focused on and feel passionate about, so that we 
understand exactly the reasons these things may be assembled or 
worded in the way that they are.
    I know that you said that you would yield to Senator Hatch 
first because your schedule accommodated. Since he is not here, 
if we can, we will go ahead with you and we will work out 
whatever we need to with Orrin when he comes.

STATEMENT OF JOSEPH I. LIEBERMAN, A U.S. SENATOR FROM THE STATE 
                         OF CONNECTICUT

    Senator Lieberman. Thanks very much, Chairman Burr, and 
thanks for inviting Senator Hatch and me to testify about some 
of the key features of S. 975, which he and Senator Brownback 
and I have introduced, but thanks really more specifically for 
the sense of urgent leadership you bring to this matter which 
is urgent; and the question which is how do we best and most 
quickly protect our people from the bioterrorist threat and 
from the naturally occurring threat of infectious diseases?
    This is no casual matter. You know, you are new here, and I 
greatly appreciate that you have focused on this and that you 
have done it with the support of Senator Enzi and Senator 
Kennedy because, believe me, if there was ever an occasion for 
bipartisan cooperation, this is it, because we are talking 
about truly the national defense, national security, national 
well-being of our people.
    I do want to say that my own feeling is that the best way 
to combat the threat of bioterrorism is to utilize one of 
America's greatest strengths, which is our innovational and 
entrepreneurial talent. The BioShield law that was enacted last 
year takes the first step, but unfortunately, my conclusion is, 
without additional reforms, companies are not likely to risk 
their own capital to fund the necessary research, leaving us 
with a Government funding model that will be expensive, and I 
am afraid will not produce the results we need.
    The concepts in our legislation, S. 975, including tax, 
intellectual property and liability reforms, we are confident 
will give us important additional tools to enlist the industry 
in this vital research. Let me try to briefly elaborate.
    BioShield II calls on this innovational spirit that I have 
talked about. We need to get companies and investors to commit 
their resources to this effort, and since intentional, 
maliciously infected infectious disease and naturally occurring 
infectious disease may have equally devastating effects, the 
incentives that we are proposing are extended to 
countermeasures to nature's threats as well. And I include by 
example pandemic flu, SARS, malaria, and ebola virus.
    Just as we in the United States seek to protect ourselves 
from new infectious disease threats, clearly, less developed 
nations are trying to eliminate scourges that have restricted 
their social and economic development for too long now, and 
BioShield II seeks to inspire innovation on behalf of neglected 
markets worldwide.
    I am glad to see Senator Hatch here. If you have a minute, 
I will just say a few more words about our bill, and then yield 
to my very distinguished colleague.
    BioShield II proposes that through the mechanism of a 
contract for a new product with the Department of HHS, 
companies receive a menu of tax incentives, some for small and 
others for medium and large companies. BioShield II, again, 
through this contract method, provides a menu of intellectual 
property incentives and options that may be appropriate 
motivators for start-up midstream or successful enterprises to 
take on these high-risk assignments.
    And finally, through the HHS contract, companies may 
partake, under our legislation, of a selection of liability 
protections as incentives to the companies to get them 
involved. We also provide grants to assist small companies with 
promising technologies that need support while undergoing 
regulatory approval of a product, and we address public health 
preparedness in the case of a national medical emergency by 
consolidating authority at DHS.
    Mr. Chairman, the intellectual property provisions that I 
mentioned above seem to be drawing the most interest, and 
frankly, the most fire, so I would like to briefly address this 
concern.
    One option we have here, which is to try again urgently to 
draw the enormous capabilities of our biotech and 
pharmaceutical industry into providing countermeasures for both 
maliciously imposed bioterrorist infectious attacks and 
naturally occurring ones, is to enact what we are calling a 
patent bonus that a company could apply to a patent in its 
portfolio in exchange for achieving the goal we have set, which 
is to protect us from these terrible threats.
    Obviously, we should not burden consumers with higher 
prices for patented products any longer than necessary, but in 
this legislation, we are raising the question of whether it is 
necessary to enact the bonus in order to establish a viable 
biodefense industry. The fact is that the established 
pharmaceutical companies have a proven record of success in 
running clinical trials and gaining regulatory approval for 
their products, which I believe are the safest and most 
effective in the world. I understand--and opponents of this 
provision of our measure have said there might be some increase 
in the cost of prescription drugs if a patent were extended for 
some period of time--but I think we have to understand exactly 
what we are proposing and the trade-off that we are suggesting.
    If we need a particular drug, a countermeasure to protect 
ourselves against a bioterror attack or to cure AIDS, or 
another deadly pathogen, then this cost should be weighed 
against the devastating cost if we fail to secure and develop 
needed medical countermeasures.
    Let me give the argument for how this might work in the 
world we know today. AIDS is costing America $18 billion a year 
to treat, to identify, all the consequences of it. In fact, the 
United States is now spending $5 billion additional dollars a 
year in aid to foreign countries to treat their citizens 
suffering from AIDS. To state this as a balance, would that be 
a fair investment for a cure or vaccine that would render that 
annual expenditure entirely unnecessary? In other words, if in 
fact the patent bonus results in some prescription drugs 
costing a little more than they otherwise would for some period 
of time, you have got to weigh that against the billions of 
dollars and incalculable benefits from saving people from the 
pain of AIDS or other illnesses we would cure. Imagine how much 
suffering would be ended, as well as lives and money saved.
    You have to ask, what is it worth to generate a platform 
technology that would promptly generate vaccines against 
emerging viruses? What would we spend for new resistance-free 
antibiotics or truly effective antiviral medications? Each of 
these discoveries I think shares something in common. They are 
not products industry seems to be willing to develop right now 
because their profit is not assured, there is not a clear 
market, and the cost of product liability or market failure are 
too high. These companies are not fulfilling the requirements 
of their shareholders as they see it by participating in these 
programs to the extent we need them to in today's economic 
environment.
    I want to finally stress this. Under S. 975, BioShield II, 
these patent extensions, either for newly developed drugs or 
for existing patents in a company's portfolio, are selectively 
available only for a limited time, up to 2 years at the 
discretion of the Secretary of DHHS, and administered at his 
discretion, and they are not automatic, which is to say they 
are not awarded unless the patent holder delivers to 
countermeasure. At some point the Secretary of DHS will say, 
OK, what you are working on with regard to a countermeasure for 
a bioterrorist, an anthrax attack or AIDS or the ebola virus or 
any number of other threats we face, pandemic flu, it looks 
good enough that we are going to agree that if it works, we 
will give you this patent extension for 6 months or 3 months, 
or maybe if it is big enough, 2 years. But you only get the 
patent bonus if the countermeasure, an effective countermeasure 
is delivered. Those incentives do not apply to existing 
entities or patents purchased from any other company after the 
contract is enforced.
    I am going to yield to my colleagues, but I wanted to 
directly deal with what clearly seems to be the most 
controversial part of the proposal Senators Hatch, Brownback, 
and I have made.
    Again, Senator Burr, you are a new Senator, but I think you 
have the potential to make an enormous contribution on a matter 
of the most urgent national interest. I thank you for your 
leadership and I look forward to working with you. And with 
your permission, I would yield to Senator Hatch.
    Senator Burr. Absolutely. Welcome, Senator.

                   Opening Statement of Senator Hatch

    Senator Hatch. Thank you, Senator Burr. I just joined 
Senator Lieberman in praising you and commending you for taking 
the lead in this area because you have been very determined, 
and I think have really been moving forth in ways that are very 
much appreciated by me and by Senator Lieberman and others as 
well. Now, I appreciate also Chairman Enzi's dedication to 
developing the best legislation possible in the area of public 
health preparedness.
    My longstanding concern in this area of bioterrorism has 
been manifested in this longstanding partnership with Senator 
Lieberman. We cosponsored bills in the last three Congresses, 
including our current BioShield II bill, S. 975. So I would 
also like to take time to acknowledge the contributions of our 
new third primary partner in this endeavor, Senator Brownback. 
As you know, I really appreciate working with Senator 
Lieberman. He is just a terrific Senator and a person who 
really takes these matters very seriously, and I am grateful to 
him, and others as well.
    I appreciate my good friend, Senator Schumer over there. He 
picks on me all the time, but other than that--[Laughter.]
    Senator Lieberman. Senator Hatch, he is going to do it 
again today.
    Senator Hatch. Is that right?
    Senator Lieberman. Yes. He is going to pick on both of us.
    Senator Schumer. Could the committee pass out Kleenex to 
everybody, please? [Laughter.]
    Senator Hatch. As you know, I have a difficult time 
defending myself.
    Senator Schumer. Oh, yes, I see that.
    Senator Hatch. I love Chuck, but he is a pain in the neck 
sometimes.
    Senator Schumer. And by the way, that is an improvement on 
what he said a few years ago. [Laughter.]
    Senator Hatch. They have been resurrecting that, much to my 
chagrin, because it was all done in good sport, and you were a 
very good sport about it, in spite of the dumb questions. 
[Laughter.] I could not resist. I apologize.
    Recently I have been heartened to the call to action so 
eloquently stated in a major address at Harvard by Senate 
Majority Leader Frist. Now is the time to couple words with 
action.
    Warning of the threat is critical, but we must take 
tangible steps to mitigate this great and growing danger while 
we can. Both Senator Lieberman and I have long recognized that 
the only sure way for the Senate to pass comprehensive, 
meaningful bioterrorism legislation is for the Majority Leader 
to call upon all of the relevant committees of jurisdiction to 
report legislation by a certain date.
    While we applaud the efforts past and present of the HELP 
Committee, especially the efforts of Senators Gregg, Enzi, 
Frist, Burr, Lieberman, Brownback, and I think that we need the 
active involvement of the Finance, Judiciary, Homeland Security 
and Agriculture Committees, among the others that have 
jurisdiction of matters we include in our bill, S. 975. I think 
this is also the case with the Gregg bill, S. 3. In fact, we 
just passed the renewal of the PATRIOT Act out of the Judiciary 
Committee before I came up here.
    I have taken note of, and have been disappointed to see, 
that by and large the private sector pharmaceutical industry 
has largely voted with their feet or at least their 
pocketbooks, and chosen not fully to involve themselves in the 
search for medical countermeasures to bioterror agents and 
emerging infectious diseases. The potential product liability 
exposure alone creates a powerful disincentive to private 
sector involvement in this field. It is no accident that the 
American vaccine industry has nearly vanished in the wake of 
enormous product liability concerns, and likely fueled by 
sometimes overzealous and outright greedy trial lawyers.
    I am also disappointed to sense an air of complacency among 
too many on the Hill and in the administration because the 
status quo is simply unacceptable. The hard truth is that in 
the summer of 2000, the Defense Science Board found that we had 
only one of the 57 diagnostics, drugs and vaccines most needed 
to respond to a bioterror attack. We now have only 2 of the 57 
countermeasures, and this list does not include medicines for 
genetically engineered or otherwise exotic bioterror agents. 
This is not only unacceptable, it is potentially very dangerous 
and deadly.
    Unfortunately, it appears it may well take another 
terrorist threat similar to the anthrax attacks that many 
people in this room experienced, or a direct threat from an 
illness like SARS or avian flu before sweeping reforms are 
adopted by Congress. I think that is pathetic. The Lieberman-
Hatch-Brownback BioShield II legislation, S. 975, was developed 
and refined with input from literally dozens and dozens of 
experts over a long period of time. It has been criticized by 
some as being too broad, too sweeping, and too generous in its 
incentives. Those critics, in my view, are misguided. This is 
not a threat we can hope to abate by nibbling around the edges.
    BioShield I should have taught us that. We have seen what 
little result we got from a change in a single area. To move 
from a position of apathy and unpreparedness to a positive or a 
posture of strength and vigilance will require more than a 
minor change here or there. That is why S. 975 contains 29 
titles and 360 pages.
    It is a comprehensive and aggressive strategy of incentives 
for the development of effective bioterrorism and infectious 
disease medical countermeasures, as well as addressing other 
critical issues like command and control, protection of our 
food and water supplies, and workforce issues.
    To those who focus upon and decry certain features of the 
intellectual property incentive, such as the wild card patent 
extension, I ask you, how much would you be willing to pay for 
preventive measures for a threat of agents like the ebola 
virus?
    Furthermore, the cost of these proposed incentives is 
trivial compared to the cost of bioterror attack or infectious 
disease outbreak. Moreover, the research that will be done by 
companies seeking to earn some of these incentives will likely 
drive all medical research forward and give rise to many 
ancillary medical benefits for Americans.
    I do not believe that it is possible to understate that a 
crisis is looming, or crises are looming. Although Secretary 
Leavitt at Health and Human Services, and Secretary Chertoff at 
Homeland Security are working tirelessly to improve our 
readiness, their hands are tied by many of the problems which 
are addressed in S. 975, that it is not only intentional 
threats with which we must concern ourselves. Naturally 
occurring and emerging disease may prove even more dangerous. 
People are already suffering terribly from dreadful diseases 
such as AIDS, tuberculosis, antibiotic resistant organisms and 
hepatitis. These diseases kill millions each year, and with 
diseases like SARS and the avian flu, there is evidence that 
things will only get worse unless we take steps to stop them.
    We need to establish biodefense, infectious disease and 
vaccine industries that can develop new diagnostics and 
therapeutics as threats evolve. We must develop the 
capabilities to quickly respond to new threats, and to do that, 
we must remove obstacles to this research.
    We also need to broaden the responsibility for developing 
these countermeasures beyond the Government by increasing 
private sector incentives. That is where many of the best and 
brightest work to develop new drugs. We should let industry do 
what it does best, and that is innovate. And we should make 
sure that appropriate rewards exist for those who succeed.
    Both S. 975 and S. 3 propose bold and innovative incentives 
to create a viable market for these medical countermeasures. 
These bills shift the cost and risk of development of these 
countermeasures to the biotech and pharmaceutical sector in 
exchange for substantial and appropriate rewards if and only if 
these companies successfully develop the countermeasures we 
need to defend ourselves against an attack or outbreak. 
Companies will be rewarded for success. This is not a 
Government subsidy for ongoing research. BioShield II is 
premised on the notion that we should use the biopharma 
industry to our national advantage.
    It is true that our bill contains aggressive R&D tax 
provisions, strong liability protections, and several IP 
incentives, but we will not be able to fill the medicine chest 
with the 57-plus required countermeasures on the cheap. 
Biopharma industry representatives have repeatedly stated that 
only if we enact all of the proposed incentives in S. 975, 
without dilution, do we have the best chance that industry will 
venture into this area.
    We are in the enviable position of being able to learn from 
the experiences of Canada and China. They paid an 
extraordinarily high price for their experiences, but they have 
hopefully learned from their pain. We must not look on in a 
disinterested fashion and argue that it could never happen to 
us. Complacency in this area has fatal results. Developing 
medicines for these emerging pathogens is perhaps the most 
important step we as Members of Congress can take to protect 
our citizens. This is as fundamental to our Nation's security 
as are our law enforcement personnel, metal detectors at 
airports and a strong well-equipped military. The magnitude of 
the threat justifies aggressive and innovative incentives.
    And I have mentioned that the spinoffs that can come from 
it are absolutely startling. When we did that little, wee, tiny 
orphan drug bill, with a cost of $14 or $15 million, it gave 
incentives to develop orphan drugs for population groups that 
are less than 200,000 people. At that time I think there were 
one or two orphan drugs available and nobody was trying to find 
answers to these people's difficulties.
    Because we did that little bill, gave minimum of 
incentives, put some prestige in cooperation under that bill, 
now we have upwards of 300 orphan drugs being developed; and 
they found by developing the orphan drugs for the benefit of 
population groups of 200,000 or less, that they have had 
spinoffs that have turned out to be multibillion dollar 
spinoffs. And, frankly, they have had research that has gone 
far beyond because of the incentives we provided in a very 
modest bill.
    BioShield II, S. 975 also seeks to build and maintain a 
national public health infrastructure to meet future health-
related threats, be they conventional weapons like the bombs in 
the London transit system, biological threats like the anthrax 
attacks, or emerging diseases like ebola. One key issue is 
command and control. To be blunt, today, no one is clearly in 
command of our public health or medical systems in the event of 
an attack or outbreak, and that issue has to be resolved.
    Our bill, S. 975, also focuses on the need to protect our 
Nation's food and water supply from bioterror and infectious 
disease threats. My home State of Utah is a rural State, and I 
appreciate the importance that agriculture plays for both the 
physical and economic health of this Nation. People often think 
of biological threats as something more for city dwellers to 
fear, but people in the country are no better off, particularly 
if the threat does not strike initially at humans. Hoof and 
mouth disease, to name just one disease, could devastate 
ranchers and families and farms. Many of the medical conditions 
we worry about can affect animals as well as humans. Any 
student of history knows that medieval chronicles of plague 
outbreaks often describe the disease's devastating effects on 
the animal as well as the human population.
    Over half of the infectious disease pathogens we fear 
today, including avian flu, SARS, ebola, Marburg, malaria, 
Chagas, schistosomiasis, hantavirus and Lyme disease, West Nile 
virus, affect both humans and animals.
    For this reason we must prepare ourselves for threats to 
our agriculture as well as to our people.
    I know that to some it is disturbing that I am talking 
about the literal destruction of civilization when I describe 
these threats, but in fact, I am. There is a reason that 
pestilence is generally considered to be one of the four 
Horsemen of the Apocalypse, because disease can cause massive 
terror and destabilize entire nations.
    We have been given an opportunity to prepare ourselves to 
ensure that our Nation and our citizens are as well-positioned 
as possible to face any medical threats, but this window of 
opportunity, in my opinion, is closing. Time is slipping away, 
and I join with my colleagues in urging you to move forward and 
as quickly and boldly as we can. The stakes are truly that 
high.
    There are a hundred reasons why S. 975 can be criticized as 
going too far, but the day after the next bioterrorist attack 
of natural disease outbreak, I bet there will be 535 Members of 
Congress who will be thinking and saying that we did not go 
fast or far enough, and I do not want to have to reach that 
position.
    Let me just close again by thanking you personally, Senator 
Burr. I agree with Senator Lieberman, you are relatively new in 
the Senate, but you are a serious, reflective, intelligent man 
who has grabbed this ball, and has spent the hours and hours of 
time, you and your staff, trying to understand this issue, 
trying to push it forward. And I, just for one, want to pay my 
tribute to you and tell you how much I personally appreciate 
you as a leader in this area. I think you are doing a terrific 
job, and I just want you to know that all of us who are really 
concerned about this are wishing for your success, and we 
intend to help you to have success in this area. I just want to 
express my gratitude to you, and gratitude to my two staffers.
    And again, I apologize to my dear friend, Senator Schumer 
for taking this long, and also Senator Lieberman, but usually 
it is Schumer who takes too long.
    Senator Schumer. You started off on a pretty good track, 
Orrin. [Laughter.]
    Senator Burr. Senator, I thank you for your comments. I 
think it is safe to say that I share the urgency that both you 
and Senator Lieberman, as well as others, have on this issue, 
and the wonderful thing is that we did not start at ground zero 
in the process because of really the spade work that has been 
done by both of you and others--Senator Gregg, the interest 
that Senator Schumer has had in this, Senator Frist has 
contributed greatly.
    Senator Hatch. Mr. Chairman, will you forgive me for having 
to leave? I have got U.S. Supreme Court-itis on my plate today.
    Senator Burr. As long as we can keep Senator Schumer here 
and leave you out there without him, we are in good shape. 
[Laughter.]
    Senator Hatch. Keep him here as long as you can and ask 
plenty of questions.
    Senator Lieberman. I do want to reassure Senator Hatch that 
there are countermeasures to U.S. Supreme Court-itis. 
[Laughter.]
    Senator Burr. With that, Senator Schumer.
    Senator Schumer. Why don't you say that into the 
microphone? [Laughter.]
    Senator Hatch. Schumer is the best.
    Senator Schumer. Now, don't say--no, no, no. [Laughter.]
    Sometimes, Orrin, I think--and this is an ultimate 
compliment from me. Sometimes I think you have a little 
Brooklyn in you. [Laughter.]
    Senator Lieberman. We promise not to mention that in Utah.

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

    Senator Schumer. Thank you, Mr. Chairman, and I appreciate 
the opportunity. I will try to be brief here, particularly 
because Orrin had such a full statement that covered everything 
several times.
    Anyway, I want to thank both Senator Hatch and Senator 
Lieberman for bringing their ideas to the table, and I could 
not agree more with the problem and the need to move quickly. 
That is extremely important. We are not doing enough. We must. 
And the efforts of Senator Hatch, Senator Lieberman, yourself, 
and many others who have been involved are terrific.
    But the need to move quickly and strongly does not mean 
that you let everything go. It does not mean that anything that 
puts the name BioShield on it is good. And I am worried that 
the proposal here will be regarded, should it pass, or could be 
regarded as a boondoggle that helped the pharmaceutical 
industry more than it helped BioShield and more than it helped 
protect us from bioterrorism. And I hope that things can be 
crafted so that the efforts we put into encouraging 
pharmaceutical companies to get involved in this issue are 
first directed at real efforts, not at things they would be 
doing already; and, second, that the amount of compensation we 
give them is consummate with the amount of effort they are 
putting in. And that is the problem with this bill.
    And, finally, at a time when drug prices are a huge issue, 
who are we making pay for this? Purchasers of drug prices. It 
is not the Government. If you went to an economist, they would 
say, okay, you believe in BioShield and you need to help the 
pharmaceutical industry with economic incentives, the 
Government should pay for it. But we are going to choose 
particular citizens who desperately need a particular drug to 
subsidize it. Now, that may be the scheme, but if you are going 
to do that, you ought to be very careful.
    So let me just get briefly to the problems I have. The 
first and most egregious problem is the wild card patent 
extension. It is a reward available to drug companies which may 
be as many as 8 years away from completing work on a 
countermeasure, and it allows companies to extend one patent 
for up to 2 years. The patent does not have to be related to 
the countermeasure. My good friend, Orrin Hatch, mentioned 
orphan drugs. Those are great. The money that was paid went 
into the drug itself. They weren't to unrelated incentives. But 
this is any drug the company can make, they can choose it. And 
then, the amount of compensation they would get is totally 
unrelated to the countermeasure.
    So Merck, for instance, earned $4.5 billion on Zocor. Merck 
could get a 2-year patent extension worth $9 billion, which 
could be in compensation for a countermeasure that might be in 
the tens of millions of dollars. Who would make such a deal? 
Who would give Merck a 2,000-percent return?
    Now, the answer is the Secretary of HHS has the discretion. 
Well, smell the coffee, my colleagues. The Secretary of HHS has 
not been a very good guardian of keeping drug prices low. Just 
look at the prescription drug bill that was passed. Joe and I 
voted against it. You were not here, Senator Burr. But it had a 
$200 billion giveaway. In fact, to help the pharmaceutical 
industries, the prescription drug bill that the President 
proposed became such a pallid compromise that no one is happy 
with it. Why are we going to repeat that? And it was the 
Secretary of HHS who was fully supporting it.
    So I do not have much faith in giving unmitigated 
discretion to the Secretary of HHS. Smart legislation would put 
limits, would not let Merck choose Zocor for a countermeasure 
that might only cost tens of millions of dollars and may never 
come to pass.
    My colleague from Connecticut, my good friend--I love him, 
I revere him--he said we do not give them the extension for any 
longer than necessary? That is not true. We give it for 
whatever the Secretary of HHS wants to. And I for one do not 
have much faith that that will work out. The pharmaceutical 
industry, when they work against HHS, seems to always get their 
way. So that is number one.
    The second provision goes to something--and where I come 
from on this, Senator Burr, is along with Senator Gregg, 
Senator McCain, and Senator Kennedy, we authored the Generic 
Drug Act, the New Generic Drug Act that passed a couple of 
years ago and that has kept the price of generics low. So I 
care a lot about generic drugs. And the second provision allows 
companies to get years and years of patent time restored far 
beyond Hatch-Waxman. And, again, the way the countermeasures 
are defined in this bill, these patent extensions could be 
granted to blockbuster drugs already on the market, like 
antidepressants or drugs for stomach disorders.
    Take Prevacid. This is a drug to treat ulcers, which could 
easily be a side effect of treatment with a countermeasure or 
of people's panic during time of attack. If the company made a 
slight tweak and got the drug approved as a countermeasure 
under the definition of this bill, which could fit, they could 
get 6 more years of patent protection worth $20 billion.
    Now, if for whatever political reason somebody wanted to 
help out the maker of Prevacid, we would allow them to do so. 
And paid for by whom? Not by the Senate, you know, the 
taxpayers as a whole, but by just the users of Prevacid. Why is 
that fair? I know we do not want to pay any more. That is the 
problem here. Nobody wants to spend more money on this, so 
let's find another route. But when the drug people, the people 
who use these drugs find out that they are being taken 
advantage of to pay for a benefit for the whole society, they 
are not going to feel too good about it.
    What is worse about these patent extensions is because 
companies can get their entire patent restored after spending 
years after developing the drug, it actually removes any 
incentive to bring the drug to market quickly.
    Finally, S. 975 includes a provision that would waive the 
rights of the Government to spur further production of 
countermeasures in time of crisis. The waiver of the marching 
rights takes away the ability of the Government to intervene in 
easily foreseeable situations where a sudden surge in demand 
for a countermeasure overwhelms the ability of the company 
holding the patent. In other words, in this one, again, just--I 
mean, it seems that the pharmaceutical industry has almost 
written large parts of this bill. We want to give them money in 
the first part as an incentive to produce a much needed drug 
because we need the much needed drug. But when it is against 
their interests to produce the much needed drug, like it was 
with Cipro a few years ago, then we say we cannot do it.
    So it seems somehow in the pantheon of interests here we 
have it a little backwards. Instead of the need to get drugs 
out to market quickly when people need them, we take the needs 
of the pharmaceutical industry first.
    So if there are times of national emergency, we cannot let 
a patent stand in the way of saving American lives. We have to 
give recompense, no question about it. But we have to do that.
    So I think that these provisions are inappropriate for 
multiple reasons. Without saying anything negative about the 
need to do something here and about the idea of helping 
companies, encouraging companies to do it, just make the 
incentive proportionate to the reward that the society gets. Do 
not just leave it completely wide open. The reward is 
disproportionate to the investment put in, very possibly, 
depending on HHS and what they approve. A drug company that 
spends tens of millions or hundreds of millions of dollars 
developing a countermeasure which will already be compensated 
when the Government purchases the product could receive a 
multibillion-dollar windfall at the expense of the drug 
consumer.
    Second, they undermine existing patent law, which protects 
the rights of consumers to affordable pharmaceuticals. We know 
how much generic drugs save Americans, save the Government in 
Medicare and Medicaid. It accounts for 50 percent of the 
country's prescriptions, 10 percent of the cost. Senator Hatch 
with Henry Waxman 20 years ago did a lot to protect the 
intellectual property of pharmaceutical companies, and I agree 
with that. They have to be rewarded. But, again, the reward 
should be proportionate. It is a balancing test, and the 
balancing test in this bill is out of whack.
    And, after all, as I mentioned earlier, it is not even 
clear that rewarding brand new products--that we are rewarding 
the brand new products that address the most dire threats. The 
definition of countermeasure could refer to many drugs that are 
already on the market. Again, you say, well, HHS will not do 
it. They have done other things that are even more egregious. 
Countermeasures are not only drugs that treat the direct effect 
of terror attacks; they can refer to drugs that treat secondary 
consequences of the attacks. So if a new vaccine produces a new 
negative side effect, I am all for providing appropriate 
incentives to ensure we have a drug to treat that side effect. 
But the language here is not drafted narrowly. As it is, we 
could end up shelling out money for migraine and antidepressant 
medications that are already on the market.
    So, Mr. Chairman, I propose we keep the thrust of 
BioShield, but that the patent-extending provisions be removed 
and be replaced with improved procurement procedures, coupled 
perhaps with some limited liability protections. I strongly 
believe we can bring companies to the table without needing to 
throw in unrelated windfalls whose costs cannot be predicted 
and that restrict the access of the American people to 
affordable prescription drugs.
    The President proposed cutting funding to bioterrorism 
preparedness grants. We cannot afford to spend billions of 
dollars that may never, ever lead to the availability of drugs 
needed to fight bioterrorism when we have not even spent the 
millions it would take to make sure the existing 
countermeasures can be delivered effectively. And I look 
forward to working with you--I am on the Finance and Judiciary 
Committees, which have some say over different parts of this, 
but your committee and all the others--to bring an effective 
bill that does not open the door for all kinds, as I said, of 
disproportionate reward and even boondoggles.
    Senator Burr. Senator Schumer, thank you very much. I feel 
compelled to give Senator Lieberman a rebuttal, but for the 
sake of time, if we can, I understand we are targeted to go to 
the floor with a vote, an up-or-down vote on Judge Dorr at 
about 10:50, 10:55. It will not be a cloture vote. My hope is 
that we could spend 15 minutes with some questions and answers 
if your time accommodates.
    Senator Schumer. I apologize, Mr. Chairman. I have some 
guests here in the back. I have to go see them. They have been 
waiting.
    Senator Burr. If Senator Lieberman has got the time, I 
would like to do that.
    Senator Lieberman. I do.
    Senator Burr. Senator Schumer, I know that we have not had 
an active line of communication with your staff, but if you 
would so accommodate us as we move into these final stages.
    Senator Schumer. I would love that.
    Senator Burr. As I said prior to your appearance, we have 
not been given a good task, but we have been given an important 
task, and that is to try to assemble a bill that addresses all 
the concerns that we have. And those concerns are not limited 
just to the health concerns of an attack. It is the concerns 
that you have and others have about how we word it and what we 
extend.
    I will assure you that we will go through every scenario, 
explore every option. At the end of the day, whether I am 
trying to sell Joe on something that we have got in the final 
product or whether I am trying to sell you on something that 
you swore should not be there, ultimately I have got the 
responsibility to convince you. In the overall scheme of 
things, this was the only thing that we could do to accomplish 
the end goal. And I think that is the degree of detail we have 
gone into from a standpoint of looking at all of these issues 
that come up.
    Senator Schumer. Thank you.
    Senator Lieberman. Mr. Chairman, if I can very briefly 
before Senator Schumer has to leave, I think it is very 
important that you try to engage us all in this. Look, I don't 
think any one of us disagrees with this fact. The current 
BioShield I is not working. And the normal market mechanisms 
are not working to bring about the countermeasures we need to 
deal with bioterrorism or infectious diseases. So we have got 
to enter the market to create new incentives. That is what this 
bill would do.
    I take heart from the fact that Senator Schumer said he 
believes that there ought to be some liability protections. 
That is important. The other important part--I think there are 
three critical parts of S. 975: one is liability; the other is 
the tax incentives for companies to get involved; and we think 
the third is patent extension. And, obviously, we disagree but, 
look, the bottom line here is urgent threats require urgent 
solutions. And this is an urgent threat that keeps all of us 
awake at night. And I am just trying to figure out how do we 
create an adequate incentive to the biopharma industry to get 
them to put their considerable talent to work to come up with 
countermeasures. And one idea is to extend the patents that 
they have only if there is proof that the company has come up 
with a countermeasure that works. And what is the consequence? 
Some people will pay what they are paying now, not more--the 
patent will be extended. They will pay what they are paying now 
for whatever the drug is--Zocor, Prevacid, you know, Lipitor or 
whatever. They will pay what they are paying now for an 
additional period of time as determined by the Secretary of 
HHS.
    I really urge my friend from New York, maybe there is a way 
we can work together on some of the language involved here if 
you are concerned about it--and I hear you--the latitude that 
we are giving the Secretary of HHS is of concern. We could 
create clearer lines so that this is a possible incentive to 
give.
    Senator Schumer. I have not said that I am against all 
patent--using the patent system. It may not be my preferred 
way, but I am willing to have give and take. But at least there 
have got to be some guards that you do not do $10 million maybe 
of needed investment for $1 billion of reward.
    Senator Lieberman. Senator Burr, blessed are the 
legislative mediators. [Laughter.]
    Senator Burr. Senator, you partially answered my first 
question, and that was the three areas that you talked about: 
liability, intellectual property through patent extension, and 
tax credits, which you highlight in your bill.
    I understand you would not have them all in there if you 
didn't think it was a package that was needed.
    Senator Lieberman. Right.
    Senator Burr. But could you prioritize those three things 
for us from a standpoint of your understanding of their 
importance to accomplish that.
    Senator Lieberman. That is harder for me. As you know, we 
have got an enormous number of incentives--I believe it is 29--
of different kinds. So I have tried to prioritize by going to 
these three. And they affect firms of different sizes. I think 
the patent extension will probably be much more attractive and 
hopefully engage the big pharmaceutical companies. I think the 
tax incentives--we have an R&D limited partnership incentive, a 
special capital gains rate, and a new market credit for R&D 
partnership pass-throughs to investors that I think will be 
particularly appealing to smaller firms. I think the liability 
protection is going to be important to both large and small 
firms.
    So it is hard for me to choose among those three. I mean, 
clearly, I hope that we are going to find it possible to 
develop a consensus around the liability protection and the tax 
incentives. The patent extension is the most provocative and 
controversial, but, frankly, it may be the most effective to 
engender a real response here.
    Senator Burr. Do you possibly see a scenario, being 
empathetic of Senator Schumer's position, where the patent 
extension for a company might exist only to the Federal 
purchases for the purposes of a threat situation? I think we 
are somewhat confident that we are not buying 100 percent of 
what we need were we to be attacked. A company having the right 
to come back and sell under BioShield a second or a third time 
without competition coming in, but they may not hold the patent 
if it has run out in the general market. Is that a possibility?
    Senator Lieberman. Well, that is one of the alternatives 
that the Secretary of HHS has under the authority we give him 
in this bill. I myself am skeptical about whether that will be 
enough to engender the enormous investment that will be 
required from the biopharma industry to come up with some of 
the countermeasures we are talking about. But we should talk 
more about it. In other words, I do think as provocative as it 
is--you know, this idea of the patent extension came out of a 
lot of talks we had, people on my staff and other staffs, 
justified by the sense of urgency. What could we do to shake 
this up to get this extraordinary industry with its enormous 
innovational capacity that--let's be honest about it, it is 
helping us live longer, better lives. We all criticize the 
industry, sometimes correctly because we are upset about 
pricing, for instance. But the fact is that the lives of all of 
us and our families are being extended by what they are doing. 
And the fact is they are not getting into this field because 
the market incentives are not enough for them. That is why we 
are looking at the patent extension.
    Senator Burr. Senator, would you agree that if we found a 
way to lessen the investment up front--research, development, 
clinical trials, that whole process--if the capital investment 
was less on the part of the companies, we can then moderate the 
back end as it relates to what is needed.
    Senator Lieberman. That is an interesting thought. 
Possible. I mean, I think probably the most--I am not sure what 
you are thinking about because there is a balance there, and 
probably the most significant way we could do it is through tax 
incentives for up-front investments to diminish the impact on a 
company. And then I suppose you have the latitude to lessen 
somewhat the incentives further on down.
    This is a tough one because we are speculating about what 
will bring other people into this field that we urgently need 
them to get into and where what we have tried so far, BioShield 
I, has clearly not worked. I mean, to some extent we probably--
and I know you have--should talk to the people in the industry 
directly, although I understand that there would be some 
skepticism about embracing every single word they say about 
what they need.
    Senator Burr. A broader question, and you alluded to this--
--
    Senator Lieberman. Incidentally--excuse me--I know Senator 
Schumer did not really mean this, but this bill was drafted by 
my staff and the staffs of Senator Hatch and Senator Brownback. 
Trust me, the biopharma industry had nothing to do with the 
drafting of this bill.
    I will say that the staff, particularly Chuck Ludlum, who 
has now retired to go to Senegal, he had a regular daily e-mail 
list that probably most people in this room and several hundred 
others were on. So people knew about what we were doing, but 
the drafting is ours.
    Senator Burr. Your bill creates a number of different 
things and a number of new offices in a number of different 
agencies. I am going to ask you a question I have asked 
everybody in the public arena, the private arena.
    Senator Lieberman. Sure.
    Senator Burr. From a standpoint of bioterrorism and 
specifically the BioShield effort or biodefense effect, who 
should be in charge?
    Senator Lieberman. Well, ultimately I think the Secretary 
of HHS has to be in charge. I mean, there are some parts of 
this that the Department of Homeland Security will have, 
naturally, and they have got to work together.
    I had an interesting conversation with Secretary Chertoff 
the other day about the extent to which he is now working, he 
thinks, better and with clearer lines with Secretary Leavitt at 
HHS. But----
    Senator Burr. Would you agree that there needs to be 
somebody named in charge of this effort?
    Senator Lieberman. I do, and particularly insofar as the 
focus here is on incentivizing the biopharma industry to 
produce the countermeasures we need to protect the lives of the 
American people from a bioterrorist attack and infectious 
diseases. And that certainly seems to me to fall most naturally 
under the Secretary of Health and Human Services.
    Senator Burr. You have been here for several years and are 
very familiar with HHS and NIH and CDC and how they work. Do we 
have a cultural problem with what we are trying to do? Do we 
have a need that may not culturally fit into how those agencies 
currently operate? Would you like to comment on that?
    Senator Lieberman. Well, it may be. I mean, I will say that 
there is a judgment being made here, the proposal we are 
making, which is that we are not going to get what we need for 
our country in terms of meeting this threat with what might be 
called a kind of big bureaucracy, command and control, frankly, 
Department of Defense-type system where we are going to buy 
everything. We think that will not work quickly enough, and it 
will end up costing us more than it should. And so far the 
attempt to put into effect in BioShield I has not worked. This 
is a very different cultural model. You are absolutely right. 
This is a model that says let's create--let's enter the market, 
as I have been saying. Let us, through Government, create the 
incentives for private capital to come in and get this job 
done. Using private innovation, which is one of the great 
strengths of our country, and let us get it done at a much 
lower cost to the taxpayers.
    Now, I am not concealing anything here. It could be that 
one of the costs associated, as I said before, is that some 
people on certain prescription drugs are going to end up paying 
the same that they do now, because the patent is going to be 
extended for 6 months or a year or whatever.
    Senator Burr. You surprised me when you said that BioShield 
has not worked. Most are not as bold to answer that. I think 
the jury is still out in many people's minds. I would happen to 
agree with you.
    Senator Lieberman. Well, yes, I think maybe I should amend 
it simply by saying that we do not see it working yet.
    Senator Burr. As robustly as had been----
    Senator Lieberman. Yes. And I understand, and there are 
some responses to this in our proposal that some of it seems to 
be cultural and bureaucratic. At least that is what the people 
on the outside say. But I think it goes beyond that, that 
basically, you know, the incentives that we put out, the system 
we created for the contract and pledged to buy is just not 
enough.
    Senator Burr. In your conversations, would you agree that 
the procurement process as designed has been a difficult 
process for individuals who considered entering into BioShield 
to understand?
    Senator Lieberman. Absolutely. That is what we hear. That 
is what independent reviews of what has happened so far have 
told us. And that, no matter what else we do, is something that 
we ought to try to fix. But it also--though this stuff is 
mostly entrepreneurial, innovational, it could end up being 
bureaucratic, too. It could end up being slowed up 
bureaucratically if the system does not change the culture.
    Senator Burr. Last question, and then we can both go vote. 
Given your view of not just your legislation but what we need 
to accomplish, if you could describe what success would be at 
the end of this process, what would it be?
    Senator Lieberman. Well, it would be a bill, a law that 
will quickly bring the power of innovation and entrepreneurship 
of the American biopharma industry to finding countermeasures 
for bioterrorist attacks and infectious diseases. And I think 
it has got to include extensions of--liability protection, tax 
incentives, and, I believe, some kind of patent extension.
    You know, Senator Hatch said it. We all live with this fear 
that everybody can pick away at our proposal. Senators Hatch, 
Brownback, and I intentionally went out further than 
conventional legislation, because this is not a conventional 
threat. And Senator Hatch said it. You can pick away at this 
now, but God forbid we come to the day when there is a 
bioterrorist attack or a terrible pandemic flu in this country, 
535 Members of Congress are going to say, ``Well, why didn't we 
do something more, quicker?'' And so I think what I would say 
success would be is if we do something more, quickly, than 
BioShield I.
    Senator Burr. Senator, again, I thank you. This morning 
when I got the e-mail that potentially the Tubes in London had 
been attacked again, my initial thought was, Boy, this one may 
be a bio attack. Maybe that means I need to get this bill done. 
I have been working on this too long. I think that probably 
went through the minds of a lot of folks who have sat down with 
your staff, with you, with my staff, who really have conveyed 
the sense of urgency that they have about the need to get this 
bill out there, to get BioShield in a functional capacity and 
to do it quickly.
    The amazing thing--and I hope that Senator Schumer's staff 
will convey this to him--is everybody that I have met with for 
the past 6 months as it relates to this effort has been 
incredibly helpful. Even the ones that may have had much 
different approaches than you or than I might have, they have 
been very patient to listen to new ideas.
    There has not been an entity--and that includes the big 
pharma, small pharma, bio device world. Nobody seems to have 
been in for selfish reasons. I think there is a frustration by 
big pharma, a frustration that is driven by how their 
businesses are traditionally modeled, and the fact that they 
have shareholders and the incredible Catch-22 that Sarbanes-
Oxley potentially puts them in when they cannot justify to 
their shareholders anything other than a profitable venture, 
which means if you have got a choice between sticking in the 
private marketplace with patented drugs versus going over here 
and accepting liability and potentially not knowing what the 
time line is, and quite honestly in BioShield procurement, not 
knowing until very late in the process exactly what the dosage 
procurement is going to be.
    Senator Lieberman. Right.
    Senator Burr. It makes it pretty tough for a publicly 
traded CEO. So this is not something that big pharma has been 
engaged in. The great thing is that we have a very innovative 
community out there that wants to participate. From a 
standpoint of myself, I think I agree with you. Our effort is 
to see how many--big pharma, small pharma, bio, everybody--that 
we can get involved in this. My hope is that over the next 30 
days we will have that blueprint that we can work in a 
partnership to try to refine and address as many of the issues 
that we all are passionate about as we possibly can. I thank 
you.
    Senator Lieberman. Thank you, Mr. Chairman. Again, you can 
really make this happen, and, of course, we start with Senator 
Frist being focused on this. What my hope would be is that you 
bring a bill out this fall and we get to passage through the 
Senate before the end of the year. It is just that urgent.
    You know, your reaction to what happened in London today is 
not a hallucination. I mean, look, we saw what happened in the 
Japanese underground system some years ago. I remember the 9/11 
Commission said that part of why 9/11 happened was a failure of 
imagination. What they clearly meant is that we could not 
imagine prior to 9/11 that people would actually do what those 
fanatics did to us on 9/11. And now we just have to imagine 
what others like them might try to do and make sure we are 
ready. That is exactly the mission that you have accepted. I 
thank you for it, and I pledge my full support to you as you go 
forward.
    Senator Burr. Thank you once again, Senator.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                 Prepared Statement of Senator Kennedy

    I commend Chairman Burr for his leadership on our 
subcommittee. He has given us an effective start, and I commend 
him for the impressive pace he has set.
    I also commend Chairman Enzi for his leadership and his 
strong commitment to biodefense issues, as well as two 
distinguished former chairmen of our committee, Senator Gregg 
and Senator Hatch.
    Senator Gregg moved the first BioShield bill through our 
committee last year. He is the lead sponsor of one of the 
bills, S. 3, we are discussing today.
    Senator Hatch and Senator Lieberman are the lead sponsors 
of the proposal, S. 975, and I join in welcoming them to 
today's discussion.
    I look forward to our discussion about the measures we need 
to take improve our biodefense capability and public 
preparedness.
    The barbaric attacks in London 2 weeks ago remind us again 
that we're still highly vulnerable to terrorist attacks, and 
must never relent in our efforts to protect the safety and 
health of the American people. We're fighting the terrorists 
overseas, but we can't neglect the real possibility that they 
can strike us at home again, and we clearly haven't done enough 
to respond to that threat.
    A year ago today, we took a significant step in protecting 
our citizens by enacting BioShield. This bipartisan legislation 
moved the ball forward, most significantly by providing 
dedicated funds to purchase countermeasures, and establishing a 
process to assure biotech companies and pharmaceutical 
companies that the Government will purchase the biodefense 
products they produce if they protect our national security.
    I believe additional action is needed. I'm hopeful we can 
work together to pass a BioShield II bill that will further 
improve the Nation's ability to respond to a bioterrorist 
attack.
    One goal is to fully engage the biotech and drug 
industries, which are not yet adequately engaged in the search 
for vaccines and drugs to keep us safe. In a sense, these 
industries are like the defense contractors that do an 
outstanding job in providing equipment and materials needed to 
protect our security in other ways. We treat these contractors 
fairly in building up an arsenal of weapons, and we must treat 
other industries fairly in building up our biodefense arsenals.
    One proposal is to offer liability protections to these 
companies. A case can be made for such protections, coupled 
with a compensation program to encourage vaccinations against 
infectious bioterror agents or even pandemic flu. We must be 
careful not to create broad protections for companies that are 
negligent, simply because products have value for biodefense. 
Liability protections are more questionable for products 
brought to market for a biodefense use that also have a strong 
commercial use.
    On the defense contractor analogy, we should also consider 
a greater role for the Government in the production of 
countermeasures using direct Federal funding by contracts or 
through a Federal production facility. Tax incentives are an 
additional idea well-worth considering.
    Increased patent protections or extended market exclusivity 
are less appropriate for products that have a traditional 
commercial use. The idea of a patent extension on a product 
unrelated to a countermeasure, as in the so-called ``wild 
card'' patent extension, is an unacceptable way of shifting the 
cost of countermeasures to the health system when current 
health costs are already unsustainable.
    Patent extensions for products that have a strong 
commercial use, even if they also have a biodefense use, would 
impose unnecessary costs on the health system. The Government 
should fund these costs directly, through appropriations, and 
not shift the costs onto private payers or other Government 
programs, such as Medicare or Medicaid.
    Public health infrastructure is another area that needs our 
immediate attention and equal priority with the development of 
countermeasures. Just as we support our armed forces in Iraq, 
we should support our front line defenses against bioterrorism 
at home--our public health and medical professionals.
    State and local health agencies and laboratories are 
underfunded, understaffed, and poorly equipped to respond to 
the threat. Law enforcement officials are worried too--with 
good reason--that they're not adequately equipped to prevent 
and respond to terrorism. What good are countermeasures if we 
don't have the public health capability to detect an attack and 
administer treatments? We need to do more to protect our 
citizens.
    Information technology is another indispensable part of 
preparedness. Electronic health records allow real-time 
tracking of disease outbreaks, so that early responses can be 
made effectively. Rapid detection of a bioterrorist attack or a 
new epidemic can mean the difference between a local outbreak 
and a national disaster.
    Our health defenses against biological attacks need to be 
as strong as our military defenses. The Bioshield Act was a 
significant step in providing greater protection for Americans, 
but we obviously have much more work to do. I look forward to 
working with the committee to strike the right balance.
    Senator Burr. The Roundtable is adjourned.
    [Whereupon, at 11:10 a.m., the Roundtable was adjourned.]

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