[Congressional Record Volume 147, Number 166 (Tuesday, December 4, 2001)]
[Senate]
[Pages S12370-S12385]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINTS RESOLUTIONS
By Mr. THOMAS (for himself and Mrs. Lincoln):
S. 1760. A bill to amend title XVIII of the Social Security Act to
provide for the coverage of marriage and family therapist services and
mental health counselor services under part B of the Medicare Program,
and for other purposes; to the Committee on Finance.
Mr. THOMAS. Mr. President, I am pleased to rise today to introduce
the Seniors Mental Health Access Improvement Act of 2001 with my
distinguished colleague from Arkansas, Mrs. Lincoln. Specifically, the
Seniors Mental Health Access Improvement Act of 2001 permits mental
health counselors and marriage and family therapists to bill Medicare
for their services. This will result in an increased choice of
providers for seniors and enhance their ability to access mental health
services in their communities.
This legislation is especially crucial to rural seniors who are often
forced to travel long distances to utilize the services of mental
health providers currently recognized by the Medicare program. Rural
communities have difficulty recruiting and retaining providers,
especially mental health providers. In many small towns a mental health
counselor or a marriage and family therapist is the only mental health
care provider in the area. Medicare law, as it exists today, compounds
the situation because only psychiatrists, clinical psychologists,
clinical social workers and clinical nurse specialists are able to bill
Medicare for their services.
It is time the Medicare program recognized the qualifications of
mental health counselors and marriage and family therapists as well as
the critical role they play in the mental health care infrastructure.
These providers go through rigorous training, similar to the curriculum
of masters level social workers, and yet are excluded from the Medicare
program.
Particularly troubling to me is the fact that seniors have
disproportionally higher rates of depression and suicide than other
populations. Additionally, 75 percent of the 518 nationally designated
Mental Health Professional Shortage Areas are located in rural areas
and one-fifth of all rural counties have no mental health services of
any kind. Frontier counties have even more drastic numbers as 95
percent do not have a psychiatrist, 68 percent do not have a
psychologist and 78 percent do not have a social worker. It is quite
obvious we have an enormous task ahead of us to reduce these staggering
statistics. Providing mental health counselors and marriage and family
therapists the ability to bill Medicare for their services is a key
part of the solution.
Virtually all of my State of Wyoming is a mental health professional
shortage area and will greatly benefit from this legislation. Wyoming
has 169 psychologists, 121 psychiatrists, and 247 social workers for a
total of 537 Medicare eligible mental health providers. Enactment of
the Seniors Mental Health Access Improvement Act of 2001 will double
the number of mental health providers available to seniors in my State
with the addition of 517 mental health counselors and 55 marriage and
family therapists currently licensed in the State.
In crafting this legislation Senator Lincoln and I worked with
numerous outside organizations with an interest in this issue. As a
result of this collaboration, the ``Seniors Mental Health Access
Improvement Act of 2001'' is strongly supported by the American
Counseling Association, the Wyoming Counseling Association, the
American Mental Health Counselors Association, the Arkansas Mental
Health Counselors Association, the American Association for Marriage
and Family Therapy, the Wyoming and Arkansas Chapters of the
Association for Marriage and Family Therapy, the California Association
of Marriage and Family Therapists, and the National Rural Health
Association.
I believe this legislation is critically important to the health and
well-being of our Nation's Seniors and I strongly urge all my
colleagues to become a cosponsor.
Mr. President, I ask unanimous consent that the text of the bill and
letters of endorsement from supporting organizations be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 1760
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Seniors Mental Health Access
Improvement Act of 2001''.
SEC. 2. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES
AND MENTAL HEALTH COUNSELOR SERVICES UNDER PART
B OF THE MEDICARE PROGRAM.
(a) Coverage of Services.--
(1) In general.--Section 1861(s)(2) of the Social Security
Act (42 U.S.C. 1395x(s)(2)), as amended by sections 102(a)
and 105(a) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (114 Stat. 2763A-468
and 2763A-471), as enacted into law by section 1(a)(6) of
Public Law 106-554, is amended--
(A) in subparagraph (U), by striking ``and'' after the
semicolon at the end;
(B) in subparagraph (V)(iii), by inserting ``and'' after
the semicolon at the end; and
(C) by adding at the end the following new subparagraph:
``(W) marriage and family therapist services (as defined in
subsection (ww)(1)) and mental health counselor services (as
defined in subsection (ww)(3));''.
(2) Definitions.--Section 1861 of such Act (42 U.S.C.
1395x), as amended by sections 102(b) and 105(b) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-468 and 2763A-471),
as enacted into law by section 1(a)(6) of Public Law 106-554,
is amended by adding at the end the following new subsection:
``Marriage and Family Therapist Services; Marriage and Family
Therapist; Mental Health Counselor Services; Mental Health Counselor
``(ww)(1) The term `marriage and family therapist services'
means services performed by a marriage and family therapist
(as defined in paragraph (2)) for the diagnosis and treatment
of mental illnesses, which the marriage and family therapist
is legally authorized to perform under State law (or the
State regulatory mechanism provided by State law) of the
State in which such services are performed, as would
otherwise be covered if furnished by a physician or as an
incident to a physician's professional service, but only if
no facility or other provider charges or is paid any amounts
with respect to the furnishing of such services.
``(2) The term `marriage and family therapist' means an
individual who--
``(A) possesses a master's or doctoral degree which
qualifies for licensure or certification as a marriage and
family therapist pursuant to State law;
[[Page S12371]]
``(B) after obtaining such degree has performed at least 2
years of clinical supervised experience in marriage and
family therapy; and
``(C) in the case of an individual performing services in a
State that provides for licensure or certification of
marriage and family therapists, is licensed or certified as a
marriage and family therapist in such State.
``(3) The term `mental health counselor services' means
services performed by a mental health counselor (as defined
in paragraph (2)) for the diagnosis and treatment of mental
illnesses which the mental health counselor is legally
authorized to perform under State law (or the State
regulatory mechanism provided by the State law) of the State
in which such services are performed, as would otherwise be
covered if furnished by a physician or as incident to a
physician's professional service, but only if no facility or
other provider charges or is paid any amounts with respect to
the furnishing of such services.
``(4) The term `mental health counselor' means an
individual who--
``(A) possesses a master's or doctor's degree in mental
health counseling or a related field;
``(B) after obtaining such a degree has performed at least
2 years of supervised mental health counselor practice; and
``(C) in the case of an individual performing services in a
State that provides for licensure or certification of mental
health counselors or professional counselors, is licensed or
certified as a mental health counselor or professional
counselor in such State.''.
(3) Provision for payment under part b.--Section
1832(a)(2)(B) of such Act (42 U.S.C. 1395k(a)(2)(B)) is
amended by adding at the end the following new clause:
``(v) marriage and family therapist services and mental
health counselor services;''.
(4) Amount of payment.--Section 1833(a)(1) of such Act (42
U.S.C. 1395l(a)(1)), as amended by sections 105(c) and 223(c)
of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-472 and 2763A-489),
as enacted into law by section 1(a)(6) of Public Law 106-554,
is amended--
(A) by striking ``and (U)'' and inserting ``(U)''; and
(B) by inserting before the semicolon at the end the
following: ``, and (V) with respect to marriage and family
therapist services and mental health counselor services under
section 1861(s)(2)(W), the amounts paid shall be 80 percent
of the lesser of the actual charge for the services or 75
percent of the amount determined for payment of a
psychologist under clause (L)''.
(5) Exclusion of marriage and family therapist services and
mental health counselor services from skilled nursing
facility prospective payment system.--Section 1888(e) of the
Social Security Act (42 U.S.C. 1395yy(e)) is amended--
(A) in paragraph (2)(A)(i)(II), by striking ``clauses (ii)
and (iii)'' and inserting ``clauses (ii) through (iv)''; and
(B) by adding at the end of paragraph (2)(A) the following
new clause:
``(iv) Exclusion of certain mental health services.--
Services described in this clause are marriage and family
therapist services (as defined in section 1861(ww)(1)) and
mental health counselor services (as defined in section
1861(ww)(3)).''.
(6) Inclusion of marriage and family therapists and mental
health counselors as practitioners for assignment of
claims.--Section 1842(b)(18)(C) of such Act (42 U.S.C.
1395u(b)(18)(C)), as amended by section 105(d) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-472), as enacted into
law by section 1(a)(6) of Public Law 106-554, is amended by
adding at the end the following new clauses:
``(vii) A marriage and family therapist (as defined in
section 1861(ww)(2)).
``(viii) A mental health counselor (as defined in section
1861(ww)(4)).''.
(b) Coverage of Certain Mental Health Services Provided in
Certain Settings.--
(1) Rural health clinics and federally qualified health
centers.--Section 1861(aa)(1)(B) of the Social Security Act
(42 U.S.C. 1395x(aa)(1)(B)) is amended by inserting ``, by a
marriage and family therapist (as defined in subsection
(ww)(2)), by a mental health counselor (as defined in
subsection (ww)(4)),'' after ``by a clinical psychologist (as
defined by the Secretary)''.
(2) Hospice programs.--Section 1861(dd)(2)(B)(i)(III) of
such Act (42 U.S.C. 1395x(dd)(2)(B)(i)(III)) is amended by
inserting ``or a marriage and family therapist (as defined in
subsection (ww)(2))'' after ``social worker''.
(c) Authorization of Marriage and Family Therapists To
Develop Discharge Plans for Post-Hospital Services.--Section
1861(ee)(2)(G) of the Social Security Act (42 U.S.C.
1395x(ee)(2)(G)) is amended by inserting ``marriage and
family therapist (as defined in subsection (ww)(2)),'' after
``social worker,''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to services furnished on or after
January 1, 2002.
____
American Counseling Association,
Alexandria, VA, November 27, 2001.
Hon. Craig Thomas,
U.S. Senate,
Washington, DC.
Dear Senator Thomas: I am writing on behalf of the American
Counseling Association, which with over 53,000 members is the
nation's largest non-profit membership organization
representing state-licensed professional mental health
counselors, to express our strong support for your
legislation, the ``Seniors Mental Health Access Improvement
Act of 2001''. We applaud your leadership in introducing this
legislation.
Medicare's mental health benefit currently excludes two
core mental health professions: licensed professional
counselors and licensed marriage and family therapists.
Statistics such as those included in the attached fact sheet
show that Medicare beneficiaries are not getting the mental
health treatment they need. Lack of access to providers is
one of the primary factors involved.
As with other areas of health care, accessing mental health
services is especially problematic in rural areas. In many
underserved communities, licensed professional counselors are
the only mental health specialists available. We feel
strongly that proposals to improve rural Medicare
beneficiaries' access to mental health care must include
expanding the pool of covered providers. However, access to
providers is not only a rural issue. An article cited on the
enclosed fact sheet, recently published by the American
Psychiatric Association, states that ``the supply of both
specialists and resources cannot meet current or future
demands'' for mental health treatment of older Americans.
Coverage of licensed professional counselors under Medicare
is a common-sense step toward ensuring that all beneficiaries
get the help they need. There are over 81,000 professional
counselors licensed as master's level mental health
professionals in Wyoming and 44 other states across the
country. These providers meet education, training, and
examination requirements on par with those of clinical social
workers, who have been covered under Medicare for over ten
years.
Thank you for your leadership in introducing this important
legislation. We look forward to working with you to gain its
enactment, and I urge you and your staff to call on us if we
can be of any assistance.
Sincerely,
Jane Goodman,
President.
____
American Counseling Association,
Alexandria, VA, November 27, 2001.
Hon. Blanche L. Lincoln,
U.S. Senate,
Washington, DC.
Dear Senator Lincoln: I am writing on behalf of the
American Counseling Association, which with over 53,000
members is the nation's largest non-profit membership
organization representing state-licensed professional mental
health counselors, to express our strong support for your
legislation, the ``Seniors Mental Health Access Improvement
Act of 2001''. We applaud your leadership in introducing this
legislation.
Medicare's mental health benefit currently excludes two
core mental health professions: licensed professional
counselors and licensed marriage and family therapists.
Statistics such as those included in the attached fact sheet
show that Medicare beneficiaries are not getting the mental
health treatment they need. Lack of access to providers is
one of the primary factors involved.
As with other areas of health care, accessing mental health
services is especially problematic in rural areas. In many
underserved communities, licensed professional counselors are
the only mental health specialists available. We feel
strongly that proposals to improve rural Medicare
beneficiaries' access to mental health care must include
expanding the pool of covered providers. However, access to
providers is not only a rural issue. An article cited on the
enclosed fact sheet, recently published by the American
Psychiatric Association, states that ``the supply of both
specialists and resources cannot meet current or future
demands'' for mental health treatment of older Americans.
Coverage of licensed professional counselors under Medicare
is a common-sense step toward ensuring that all beneficiaries
get the help they need. There are over 81,000 professional
counselors licensed as master's level mental health
professionals in Arkansas and 44 other states across the
country. These providers meet education, training, and
examination requirements on par with those of clinical social
workers, who have been covered under Medicare for over ten
years.
Thank you for your leadership in introducing this important
legislation. We look forward to working with you to gain its
enactment, and I urge you and your staff to call on us if we
can be of any assistance.
Sincerely,
Jane Goodman,
President.
____
Wyoming Counseling Association,
November 27, 2001.
Hon. Craig Thomas,
U.S. Senate,
Washington, DC
Dear Senator Thomas: The Wyoming Counseling Association is
pleased to convey its strong support of your legislation, the
``Seniors Mental Health Access Improvement Act of 2001''. We
are proud of your leadership on mental health issues, as
evidenced by your introduction of this and other legislation,
and your support of S. 543, the ``Mental Health Equitable
Treatment Act of 2001''.
[[Page S12372]]
Wyoming's residents often have only limited--if any--access
to mental health professionals. There simply aren't enough
providers. Given this fact, it makes no sense to continue to
exclude licensed professional counselors from Medicare
coverage, when similarly-trained providers are covered. In
many parts of the state, licensed professional counselors are
the only mental health specialists around.
We believe that establishing Medicare coverage of licensed
professional counselors is a cost-effective means of
improving the health and well-being of enrollees. The more
than 500 professional counselors licensed in Wyoming should
be allowed to help meet their mental health needs. It should
jolt Congress into action to know that older Americans are
the demographic group in the U.S. most at risk of committing
suicide. This must be remedied.
Please let us know if there is anything we can do to assist
you on mental health issues, and thank you again for your
leadership, initiative, and hard work.
Sincerely,
Karen Robertson,
President.
Dr. David L. Beck,
Past-President.
Lesley Travers,
President-elect.
____
American Mental Health
Counselors Association,
Alexandria, VA, November 27, 2001.
Hon. Craig Thomas,
U.S. Senate, Hart Senate Office Building, Washington, DC
Dear Senator Thomas: I am writing on behalf of the American
Mental Health Counselors Association (AMHCA) to express our
strong support for the Seniors Mental Health Access
Improvement Act, legislation to expand access to mental
health providers in the Medicare program. As president of
AMHCA and a Licensed Mental Health Counselor (LMHC), I
commend you and Senator Lincoln for introducing this
important legislation.
AMHCA is the nation's largest professional organization
exclusively representing the mental health counseling
profession. Our members practice in a variety of settings,
including hospitals, community mental health centers, managed
behavioral health care organizations, employee assistance
plans, substance abuse treatment centers, and private
practice. Currently, there are more than 80,000 licensed or
certified professional counselors practicing in the United
States, including many in rural areas where access to mental
health care is often scarce.
As you know, Medicare covers the services of independently
practicing psychiatrists, clinical psychologists, clinical
social workers, and clinical nurse specialists, but does not
recognize mental health counselors or marriage and family
therapists as separately reimbursable mental health
providers. Specifically, the Seniors Mental Health Access
Improvement Act would correct this inequity by including
mental health counselors and marriage and family therapists
among the list of providers who can deliver mental health
services to Medicare beneficiaries, provided they are legally
authorized to deliver such care under state law. Enactment of
this provision would increase access to and the availability
of mental health services to Medicare beneficiaries,
particularly for those seniors who reside in rural and
underserved areas. The inclusion of mental health counselors
and marriage and family therapists as Medicare providers
would also afford beneficiaries greater choice among
qualified providers.
Again, thank you for the leadership you have shown in
introducing this legislation and for your commitment to
ensuring greater access for seniors affected by mental
illness. If I can be of assistance to you as you work towards
the enactment of the Seniors Mental Health Access Improvement
Act, please feel free to contact me. Beth Powell, AMHCA's
Director of Public Policy and Professional Issues, is also
available to assist you and your staff.
Sincerely,
Midge Williams,
President.
____
American Mental Health
Counselors Association,
Alexandria, VA, November 28, 2001
Hon. Blanche L. Lincoln,
U.S. Senate, Dirksen Senate Office Building, Washington, DC
Dear Senator Lincoln: I am writing on behalf of the
American Mental Health Counselors Association (AMHCA) to
express our strong support of the Seniors Mental Health
Access Improvement Act, legislation to expand access to
mental health providers in the Medicare program. As president
of AMHCA and a Licensed Mental Health Counselor (LMHC), I
commend you and Senator Thomas for introducing this important
legislation.
AMHCA is the nation's largest professional organization
exclusively representing the mental health counseling
profession. Our members practice in a variety of settings,
including hospitals, community mental health centers, managed
behavioral health care organizations, employee assistance
plans, substance abuse treatment centers, and private
practice. Currently, there are more than 80,000 licensed or
certified professional counselors practicing in the United
States, including many in rural areas where access to mental
health care is often scarce. The Arkansas Mental Health
Counselors Association (ArMHCA), a state chapter of AMHCA,
represents the interests of mental health counselors
practicing in your state.
As you know, Medicare covers the services of independently
practicing psychiatrists, clinical psychologists, clinical
social workers, and clinical nurse specialists, but does not
recognize mental health counselors or marriage and family
therapists as separately reimbursable mental health
providers. Specifically, the Seniors Mental Health Access
Improvement Act would correct this inequity by including
mental health counselors and marriage and family therapists
among the list of providers who can deliver mental health
services to Medicare beneficiaries, provided they are legally
authorized to deliver such care under state law. Enactment of
this provision would increase access to and the availability
of mental health services to Medicare beneficiaries,
particularly for those seniors who reside in rural and
underserved areas. The inclusion of mental health counselors
and marriage and family therapists as Medicare providers
would also afford beneficiaries greater choice among
qualified providers.
Again, thank you for the leadership you have shown in
introducing this legislation and for your commitment to
ensuring greater access for seniors affected by mental
illness. If I can be of assistance to you as you work towards
the enactment of the Seniors Mental Health Access Improvement
Act, please feel free to contact me. Beth Powell, AMHCA's
Director of Public Policy and Professional Issues, is also
available to assist you and your staff.
Sincerely,
Midge Williams,
President.
____
Arkansas Mental Health
Counselors Association,
Jonesboro, AR, November 27, 2001.
Hon. Blanche L. Lincoln,
U.S. Senate, Dirksen Senate Office Building, Washington, DC.
Dear Senator Lincoln: I am writing on behalf of the
Arkansas Mental Health Counselors Association (ArMHCA) to
express our strong support for the Seniors Mental Health
Access Improvement Act and to convey our sincere appreciation
to you for introducing this legislation. As a Licensed
Professional Counselor (LPC) and a constituent, I want to
express to you the importance of this legislation to LPCs in
our state and to the nation's 39 million Medicare
beneficiaries.
Mental health counselors-called Licensed Professional
Counselor in Arkansas are mental health professionals with a
master's or doctoral degree in counseling or related
disciplines who provide services along a continuum of care.
Currently, 45 states and the District of Columbia license or
certify mental health counselors to independently provide
mental health services, including the diagnosis and treatment
of mental and emotional disorders. LPCs practice in a variety
of settings, including hospitals, community mental health
centers, managed behavioral health care organizations,
employee assistance plans, substance abuse treatment centers,
and private practice.
Medicare currently covers the services of independently
practicing psychiatrists, clinical psychologists, clinical
social workers, and clinical nurse specialists, however; it
does not recognize mental health counselors or marriage and
family therapists as separately reimbursable mental health
providers. The Seniors Mental Health Access Improvement Act
corrects this oversight by including mental Health counselors
and marriage and family therapist among the list of providers
who deliver mental health services to Medicare beneficiaries,
provided they are legally authorized to perform the services
under state law. Enactment of this provision would increase
access to and the availability of mental health services to
Medicare beneficiaries, particularly for those seniors who
reside in rural and underserved area. The inclusion of mental
health counselors and marriage and family therapists in the
program would also afford beneficiaries a choice among
qualified providers.
Again, thank you for the leadership you have shown in
introducing this important legislation. If I can be of
assistance to you as your work towards enactment of the
Seniors Mental Health Improvement Access Act please feel free
to contact me. Beth Powell, AMHCA's Director of Public and
Professional Issues, is also available to assist you and your
staff.
Sincerely,
Dee Kernodle
President.
____
American Association for
Marriage and Family Therapy,
Washington, DC, December 3, 2001.
Hon. Craig Thomas,
Hart Senate Office Building,
Washington, DC.
Dear Senator Thomas: The American Association for Marriage
and Family Therapy is writing on behalf of the 46,000
marriage and family therapists throughout the United States
to commend you for sponsoring the Seniors Mental Health
Access Improvement Act of 2001. This crucial legislation to
expand the mental health benefits for our elderly will go a
long way towards improving Medicare beneficiaries' access to
critical mental health services provided by Marriage and
Family Therapist (MFTs) and Mental Health Counselors (MHCs)
across the nation.
[[Page S12373]]
As you know, mental illness is a major problem for many
Americans, and particularly for the elderly. Research
demonstrates that depression is disproportionately high among
older persons, as is the incidence of suicide. The Surgeon
General's Report on Mental Health has indicated that there
are effective treatments for these and other mental
illnesses. The Seniors Mental Health Access Improvement Act
of 2001 helps make these treatments accessible to elderly
citizens. By expanding the pool of qualified providers, the
bill also achieves the important objective of increasing
access to mental health services for elderly in rural areas,
where there is a recognized shortage of professionals.
Passage of the Seniors Mental Health Access Improvement Act
of 2001 will ensure that Medicare beneficiaries in need of
mental health services will have the same freedom to choose a
mental health professional available in their community as
the non-Medicare population. The Archives of General
Psychiatry projects that the number of people over 65 years
with psychiatric disorders will increase from about 4 million
in 1970 to 15 million in 2030. It also indicates that the
current health care system is unprepared to meet the upcoming
crisis in geriatric mental health. Providing access to
licensed MFTs and MHCs will help ensure that there are an
adequate number of providers available to meet the needs of
the growing elderly population.
Your leadership and support to address the mental health
needs of our seniors is greatly appreciated. It is about time
the Medicare program is structured to respond to the demands
of the elderly population it serves. AAMFT hopes the Seniors
Mental Health Improvement Act of 2001 will become law. We
look forward to working with you to meet this objective.
Thank you again for your commitment to improving the lives of
the elderly.
Sincerely,
David M. Bergman,
Director of
Legal and Government Affairs.
____
American Association for
Marriage and Family Therapy,
Washington, DC, December 3, 2001.
Hon. Blanche Lambert Lincoln,
Dirksen Senate Office Building,
Washington, DC.
Dear Senator Lincoln: The American Association for Marriage
and Family Therapy is writing on behalf of the 46,000
marriage and family therapists throughout the United States
to commend you for sponsoring the Seniors Mental Health
Access Improvement Act of 2001. This crucial legislation to
expand the mental health benefits for our elderly will go a
long way towards improving Medicare beneficiaries' access to
critical mental health services provided by Marriage and
Family Therapist (MFTs) and Mental health Counselors (MHCs)
across the nation.
As you know, mental illness is a major problem for many
Americans, and particularly for the elderly. Research
demonstrates that depression is disproportionately high among
older persons, as is the incidence of suicide. The Surgeon
General's Report on Mental Health has indicated that there
are effective treatments for these and other mental
illnesses. The Seniors Mental Health Access Improvement Act
of 2001 helps make these treatments accessible to elderly
citizens. By expanding the pool of qualified providers, the
bill also achieves the important objective of increasing
access to mental health services for elderly in rural areas,
where there is a recognized shortage of professionals.
Passage of the Seniors Mental Health Access Improvement Act
of 2001 will ensure that Medicare beneficiaries in need of
mental health services will have the same freedom to choose a
mental health professional available in their community as
the non-Medicare population. The Archives of General
Psychiatry projects that the number of people over 65 years
with psychiatric disorders will increase from about 4 million
in 1970 to 15 million in 2030. It also indicates that the
current health care system is unprepared to meet the upcoming
crisis in geriatric mental health. Providing access to
licensed MFTs and MHCs will help ensure that there are an
adequate number of providers available to meet the needs of
the growing elderly population.
Your leadership and support to address the mental health
needs of our seniors is greatly appreciated. It is about time
the Medicare program is structured to respond to the demands
of the elderly population it serves. AAMFT hopes the Seniors
Mental Health Improvement Act of 2001 will become law. We
look forward to working with you to meet this objective.
Thank you again for your commitment to improving the lives of
the elderly.
Sincerely,
David M. Bergman,
Director of
Legal and Government Affairs.
____
Wyoming Association for
Marriage and Family Therapy,
Jackson, WY, November 30, 2001.
Hon. Craig Thomas,
Hart Senate Office Building,
Washington, DC.
Dear Senator Thomas: On behalf of the Wyoming Association
for Marriage and Family Therapy, I want to thank you for
agreeing to sponsor the Seniors Mental Health Improvement Act
of 2001.
This important legislation will go a long way toward
improving Medicare beneficiaries' access to critical mental
health services in our state. As you know, more than 90
percent of Wyoming has been designated by the federal
government as a mental health professional shortage area. By
authorizing Medicare coverage for both Marriage and Family
Therapists (MFTs) and Mental Health Counselors (MHCs), you
are more than doubling the number of mental health
professionals available to provide services to the Medicare
population in these underserved areas.
Your legislation will also ensure that Wyoming
beneficiaries in need of mental health services will have the
same freedom to choose the mental health professional
available in their community as the non-Medicare population.
As you are aware, our state has already authorized MFTs to
provide a wide range of mental health services covered by the
Medicare program. Unfortunately, because Medicare does not
currently recognize MFTs, Medicare beneficiaries must often
travel hundreds of miles to be seen by a mental health
professional who is recognized by the Medicare program. This,
despite the fact that there may be a Marriage and Family
Therapist in their community that the state has already
deemed qualified to provide the covered services.
Your support for improved access to mental health services
is greatly appreciated. We look forward to working with you
on this important legislation. I would also personally like
to send my best wishes to you and Susan and hope that all is
well in Washington.
Sincerely,
Cindy Knight
President.
____
Arkansas Association for
Marriage and Family Therapy,
December 1, 2001.
Hon. Blanche Lambert Lincoln,
Dirksen Senate Office Building,
Washington, DC.
Dear Senator Lincoln: I was part of a coalition of four
mental health organizations that wrote to you last week on
behalf of the Seniors Mental Health Improvement Act of 2001.
However, I wanted to address that again with you specifically
from the Arkansas Association for Marriage and Family
Therapy. This is such an important piece of legislation on
behalf of our aging population.
This important legislation will go a long way towards
improving Medicare beneficiaries' access to critical mental
health services in our state. As you know, more than 90
percent of Arkansas has been designated by the federal
government as a mental health professional shortage area. By
authorizing Medicare coverage for both Marriage and Family
Therapists (MFTs) and Licensed Professional Counselors (LPCs)
or Mental Health counselors (MHCs) you are more than doubling
the number of mental health professionals available to
provide services to the Medicare population in these under-
served regions.
Your legislation will also ensure that Arkansas Medicare
beneficiaries in need of mental health services will have the
same freedom to choose the mental health professional
available in their community as the non-Medicare population.
As you are aware, our state has already authorized MFTs to
provide a wide range of mental health services covered by the
Medicare program. Unfortunately, because Medicare does not
currently recognize MFTs, Medicare beneficiaries must often
travel hundreds of miles to be seen by a mental health
professional that is recognized by Medicare. In my practice,
I am aware of long waits for seniors to see providers due to
the few and the overload of those providers. This, despite
the fact that there may be a Marriage and Family Therapist in
their community that the state has already deemed qualified
to provide the covered services.
Your support for improved access to mental health services
is greatly appreciated. We look forward to working with you
on this important legislation.
Sincerely,
Dell Tyson,
President.
____
National Rural Health Association,
Kansas City, MO, December 3, 2001.
Hon. Craig Thomas,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senator Thomas: On behalf of the National Rural Health
Association, I would like to convey our strong support for
the Seniors Mental Health Access Improvement Act of 2001.
While a lack of primary care services in rural and frontier
areas has long been acknowledged, the scarcity of rural
mental health services has only recently received increased
attention. At the end of 1997, 76% of designated mental
health professional shortage areas were located in non-
metropolitan areas with a total population of over 30 million
Americans. Currently there is an increased need for
intervention by mental health care professionals to help
people cope with the aftermath of the September 11 terrorist
attacks as well as the ongoing war on terrorism. Because
there is less access to mental health care in rural America,
rural residents will have a subsequent lack of professional
guidance in dealing with the recent trauma experienced by our
country.
[[Page S12374]]
The Seniors Mental Health Access Improvement Act of 2001
would help provide increased access to mental health car
services in rural and frontier areas by allowing Licensed
Professional Counselors and Marriage and Family Therapists to
bill Medicare for their services and be paid 80 percent of
the lesser of the actual charge for the services or 75
percent of the amount determined for payment of a
psychologist.
The membership of the NRHA appreciates your bringing
attention to the critical issue of access to mental health
care in rural areas as well as your ongoing leadership on
rural health issues. The NRHA stands ready to work with you
on enactment of the Seniors Mental Health Access Improvement
Act of 2001, which would help to increase the availability of
mental health care in rural and frontier areas.
Sincerely,
Charlotte Hardt,
President.
____
National Rural Health Association,
Kansas City, MO, December 3, 2001.
Hon. Blanche Lincoln,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senator Lincoln: On behalf of the National Rural
Health Association, I would like to convey our strong support
for the Seniors Mental Health Access Improvement Act of 2001.
While a lack of primary care services in rural and frontier
areas has long been acknowledged, the scarcity of rural
mental health services has only recently received increased
attention. At the end of 1997, 76% of designated mental
health professional shortage areas were located in non-
metropolitan areas with a total population of over 30 million
Americans. Currently there is an increased need for
intervention by mental health care professionals to help
people cope with the aftermath of the September 11 terrorist
attacks as well as the ongoing war on terrorism. Because
there is less access to mental health care in rural America,
rural residents will have a subsequent lack of professional
guidance in dealing with the recent trauma experienced by our
country.
The Seniors Mental Health Access Improvement Act of 2001
would help provide increased access to mental health car
services in rural and frontier areas by allowing Licensed
Professional Counselors and Marriage and Family Therapists to
bill Medicare for their services and be paid 80 percent of
the lesser of the actual charge for the services or 75
percent of the amount determined for payment of a
psychologist.
The membership of the NRHA appreciates your bringing
attention to the critical issue of access to mental health
care in rural areas as well as your ongoing leadership on
rural health issues. The NRHA stands ready to work with you
on enactment of the Seniors Mental Health Access Improvement
Act of 2001, which would help to increase the availability of
mental health care in rural and frontier areas.
Sincerely,
Charlotte Hardt,
President.
____
California Association of
Marriage and Family Therapists,
San Diego, CA, November 19, 2001.
Re Medicare Legislation to Recognize Marriage and Family
Therapists and Professional Counselors.
Hon. Craig Thomas,
U.S. Senate,
Washington, DC.
Dear Senator Thomas: We are writing to you in recognition
and support of your willingness to cosponsor legislation that
would dramatically improve access to mental health services
for Medicare beneficiaries. By adding licensed marriage and
family therapists and licensed professional counselors, it
will open many opportunities within Medicare for patients to
locate and receive therapy from appropriately trained and
qualified professionals.
On behalf of the 24,500 members of the California
Association of Marriage and Family Therapists, we support
your willingness to co-sponsor this legislation. Under
California law, licensed marriage and family therapists are
legally authorized to provide mental health services and are
reimbursed by most all third party payers for the diagnosis
and treatment of mental disorders. However, because Medicare
does not recognize this particular discipline, California
licensed marriage and family therapists are precluded from
providing these services and Medicare beneficiaries are
precluded from utilizing marriage and family therapists to
provide mental health counseling and treatment.
Marriage and family therapists are considered one of the
five ``core mental health professions'' recognized by the
federal government. Unfortunately, however, we are the only
core mental health profession not recognized by Medicare.
We appreciate and thank you for you willingness to take on
the challenge of sponsoring legislation to make LMFTs and
LPCs eligible for reimbursement by Medicare.
Sincerely,
Mary Riemersma,
Executive Director.
____
California Association of
Marriage and Family Therapists,
San Diego, CA, November 19, 2001.
Re Medicare Legislation to Recognize Marriage and Family
Therapists and Professional Counselors.
Hon. Blanche Lincoln,
U.S. Senate,
Washington, DC.
Dear Senator Lincoln: We are writing to you in recognition
and support of your willingness to cosponsor legislation that
would dramatically improve access to mental health services
for Medicare beneficiaries. By adding licensed marriage and
family therapists and licensed professional counselors, it
will open many opportunities within Medicare for patients to
locate and receive therapy from appropriately trained and
qualified professionals.
On behalf of the 24,500 members of the California
Association of Marriage and Family Therapists, we support
your willingness to co-sponsor this legislation. Under
California law, licensed marriage and family therapists are
legally authorized to provide mental health services and are
reimbursed by most all third party payers for the diagnosis
and treatment of mental disorders. However, because Medicare
does not recognize this particular discipline, California
licensed marriage and family therapists are precluded from
providing these services and Medicare beneficiaries are
precluded from utilizing marriage and family therapists to
provide mental health counseling and treatment.
Marriage and family therapists are considered one of the
five ``core mental health professions'' recognized by the
federal government. Unfortunately, however, we are the only
core mental health profession not recognized by Medicare.
We appreciate and thank you for you willingness to take on
the challenge of sponsoring legislation to make LMFTs and
LPCs eligible for reimbursement by Medicare.
Sincerely,
Mary Riemersma,
Executive Director.
Mrs. LINCOLN. Mr. President, I am pleased to join my colleague
Senator Thomas today in introducing the Seniors Mental Health Access
Improvement Act of 2001.
This bill would expand Medicare coverage to licensed professional
counselors and licensed marriage and family therapists. One result of
this expanded coverage will be to increase seniors' access to mental
health services, especially in rural and underserved areas.
Licensed professional counselors and marriage and family therapists
are currently excluded from Medicare coverage even though they meet the
same education, training, and examination requirements that clinical
social workers do. The only difference is that clinical social workers
have been covered under Medicare for over a decade.
Why do we need this legislation? The mental health needs of older
Americans are not being met. Although the rate of suicide among older
Americans is higher than for any other age group, less than three
percent of older Americans report seeing mental health professionals
for treatment. And going to their primary care physician is simply not
enough. Research shows that most primary care providers receive
inadequate mental health training, particularly in geriatrics.
Lack of access to mental health providers is one of the primary
reasons why older Americans don't get the mental health treatment they
need. Not surprisingly, this problem is exacerbated in rural and
underserved areas.
Licensed professional counselors are often the only mental health
specialists available in rural and underserved communities. This is
true in my home State of Arkansas, where 91 percent of Arkansans reside
in a mental health professional shortage area.
Since there are more licensed professional counselors practicing in
my State than any other mental health professional, this legislation
will significantly increase the number of Medicare--eligible mental
health providers in Arkansas. Licensed professional counselors are
already serving patients who have private insurance or Medicaid. It is
time for Medicare patients to also have access to these professionals.
The bill we are introducing today is an important first step in
expanding access to good mental health. By including licensed
professional counselors and licensed marriage and family therapists
among the list of providers who deliver mental health services to
Medicare beneficiaries, we will help ensure that all seniors, no matter
where they live, have the opportunity to receive mental health
treatment.
______
By Mr. DORGAN (for himself, Mr. Campbell, and Mr. Bingaman):
S. 1761. A bill to amend title XVII of the Social Security Act to
provide for coverage of cholesterol and blood lipid screening under the
Medicare Program; to the Committee on Finance.
[[Page S12375]]
Mr. DORGAN. Mr. President, today I am introducing the Medicare
Cholesterol Screening Coverage Act of 2001, along with my colleagues
Mr. Campbell and Mr. Bingaman. This bipartisan legislation, which also
has been introduced in the House of Representatives, would add blood
cholesterol screening as a covered benefit for Medicare beneficiaries.
The most recent guidelines from the National Heart, Lung and Blood
Institute recommends that all Americans over the age of 20 be screened
for high cholesterol. Yet current Medicare policy only covers
cholesterol testing for patients who already have heart disease, stroke
or other disorders associated with elevated cholesterol levels. Thus,
enactment of this bill will help save lives of the approximately one-
third of Medicare recipients not already covered for cholesterol
testing.
High cholesterol is a major risk factor for heart disease and stroke,
the Nation's number 1 and number 3 killers of both men and women.
Cardiovascular disease kills nearly a million people each year in this
country, more than the next seven leading causes of death combined. In
particular, Americans over the age of 65 have the highest rate of
coronary heart disease, CHD, in the Nation and about 80 percent of the
deaths from CHD occur in this age group. It is not surprising that
cardiovascular diseases account for one-third of all Medicare's
spending for hospitalizations.
Obviously, in order to slow the onset of CHD, it is first necessary
to identify those with elevated cholesterol, which is why passage of
this bill is so critical. The importance of identifying those at risk
for CHD is illustrated by the results of just released research from
Oxford University. This study showed that in elderly people, lowering
of cholesterol was associated with a one-third reduction in heart
attack and stroke and a substantially reduced need for surgery to
repair or open clogged arteries.
Clearly, this bill can save lives. Yet despite the importance of
identifying this major, changeable risk factor for cardiovascular
disease, screening for cholesterol is not covered by Medicare. I have
felt for a long while that our health care system, and Medicare in
particular, needs to place a greater emphasis on preventative health
care. Implementation of the measures in this bill can potentially
decrease the incidence of cardiovascular disease resulting in reduced
illness, debilitation and death. Early detection of illness is often an
important factor in successful treatment and has been effective in
reducing long-term health care costs.
Previously, Congress in its wisdom, has acted to provide for other
screening tests including bone mass measurement, and screenings for
glaucoma and for colorectal, prostate and breast cancer. Now we must
take another step in the right direction by extending Medicare coverage
for cholesterol screening.
It is only right that the Congress do what it can to help implement
the guidelines of the National Heart, Lung and Blood Institute, and it
is only right that we provide these benefits for all Medicare
recipients. I urge my Senate colleagues to join me in cosponsoring this
piece of legislation. I ask unanimous consent that the text of the bill
be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1761
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Cholesterol
Screening Coverage Act of 2001''.
SEC. 2. MEDICARE COVERAGE OF CHOLESTEROL AND BLOOD LIPID
SCREENING.
(a) In General.--Section 1861 of the Social Security Act
(42 U.S.C. 1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraph (U);
(B) by adding ``and'' at the end of subparagraph (V); and
(C) by adding at the end the following new subparagraph:
``(W) cholesterol and other blood lipid screening tests (as
defined in subsection (ww)(1));''; and
(2) by adding at the end the following new subsection:
``Cholesterol and Other Blood Lipid Screening Test
``(ww)(1) The term `cholesterol and other blood lipid
screening test' means diagnostic testing of cholesterol and
other lipid levels of the blood for the purpose of early
detection of abnormal cholesterol and other lipid levels.
``(2) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency and type of cholesterol and other blood lipid
screening tests for individuals who do not otherwise qualify
for coverage for cholesterol and other blood lipid testing
based on established clinical diagnoses.''.
(b) Frequency.--Section 1862(a)(1) of such Act (42 U.S.C.
1395y(a)(1)) is amended--
(1) by striking ``and'' at the end of subparagraph (H);
(2) by striking the semicolon at the end of subparagraph
(I) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(J) in the case of a cholesterol and other blood lipid
screening test (as defined in section 1861(ww)(1)), which is
performed more frequently than is covered under section
1861(ww)(2).''.
(c) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after January 1, 2003.
______
By Mr. DASCHLE (for himself and Mr. Johnson):
S. 1763. A bill to promote rural safety and improve rural law
enforcement; to the Committee on Finance.
Mr. DASCHLE. Mr. President, in the weeks since September 11, we've
heard a lot about homeland security. Right now, we're working to make
our Nation's infrastructure more secure, our food and water supply
safer, and to improve our government's ability to respond to chemical
and biological weapons attacks.
To me, homeland security also means giving all of our Nation's law
enforcement officers the tools and training they need to do their jobs.
And that means recognizing that law enforcement in rural America has
its own unique set of challenges: rural law enforcement officers patrol
larger areas, and operate under tighter budgets with smaller staffs,
than most of their urban and suburban counterparts.
In States like South Dakota, often, just a handful of people are
responsible for patrolling an entire county. Law enforcement officers
respond to a lot of calls alone, and often have to communicate with
each other by cell phone. Backup can be several hours away. Yet we
expect the same quality of service, and we demand lower crime rates.
I believe Washington can and must do a better job of helping rural
law enforcement do their work. That is why I am proud to join my
colleague and friend, Senator Tim Johnson, in introducing the Rural
Safety Act of 2001.
While Tim and I are the ones introducing this bill, we want to thank
all of the South Dakota sheriffs with whom we've spoken whose ideas and
experiences are incorporated within it. For my part, I'd like to
recognize: Sheriff Mike Milstead of Minnehaha County, Sheriff Mark
Milbrandt of Brown County, Sheriff Leidholt of Hughes County, Chief Al
Aden of Pierre, Chief Duane Heeney of Yankton, Chief Ken Schwab of my
hometown, Aberdeen, Chief Doug Feltman of Mitchell; and Chief Craig
Tieszen of Rapid City.
One theme I've heard repeated on visit after visit is this:
Washington needs to do a better job working with State and local law
enforcement agencies. To me, that means building on what we know works,
and developing new initiatives that respond to the special law
enforcement challenges of small towns and rural communities. To that
end, this bill does six things: First, it builds on our success with
the COPS program. COPS has enabled South Dakota communities to hire
more than 300 law enforcement officers. Across the country, it's added
more than 100,000 new officers to the ``thin blue line.'' Under this
proposal, rural communities that hire officers through the COPS program
will be eligible for federal funding to keep those offices on for a
fourth year.
Second, because rural law enforcement officers have to cover such
large areas, rural law enforcement agencies arguably have a greater
need for advanced communications equipment than many urban and suburban
departments, but have fewer resources to purchase them. Recently, I
received a letter from Sgt. Marty Goetsch in the Lawrence County
Sheriff's Office in Deadwood, SD. He told me that his office, and its
staff of 11, are ``very much behind in the available technology.'' This
bill provides funds to help rural communities obtain things like mobile
data computers and dash-mounted
[[Page S12376]]
video cameras. It will also provide additional funds for training to
use new technologies.
Third, this bill will establish a Rural Policing Institute as a way
to help rural law enforcement officers upgrade their skills and
tactics.
Fourth, it will expand and improve the 9-1-1 emergency assistance
systems in rural areas. Many of us take for granted that in an
emergency, we can call 9-1-1, and help will be there. In rural and
remote areas, the nearest help may be miles away. We need to make sure
that people in rural areas can rely on a modern, integrated system of
communication between law enforcement, and fire and other safety
officials. The Rural Safety Act will provide the resources to finish
the job and develop a seamless 9-1-1 system all across America.
Fifth, the bill will help communities create ``restorative justice''
for first-time, non-violent juvenile offenders. These programs offer
victims the opportunity to confront youthful offenders and require that
these offenders make meaningful restitution to their victims. In many
cases, that will meet our societal goals more effectively and more
efficiently that costly incarceration.
Sixth, it will enable us to stop the spread of ``meth'' now, before
it becomes a crisis. A study released last year by the Center on
Addiction and Substance Abuse at Columbia University shows that eighth
graders living in rural communities are 104 percent more likely to have
used amphetamines, including methamphetamine. We need to stop the use
of all of these drugs, but in rural America, meth is particularly
addictive, and devastatingly destructive. This proposal will increase
prevention and treatment of meth use, and cleanup of meth labs that
have been discovered and shut down.
Seventh and finally, our plan will offer gun owners tax credits to
purchase gun safes. It will also provide law enforcement agencies with
resources to buy and install gun safes or gun storage racks for
officers' homes. I don't believe Washington should restrict the right
of law-abiding citizens to own guns. But if gun owners want help in
preventing accidental gun tragedies, I believe Washington can, and
should, help.
When we talk about homeland security, I believe we need to think
about the law enforcement needs of those who live in America's rural
areas. That is what this bill does, and that is why I encourage all of
my colleagues to support it.
______
By Mr. LIEBERMAN:
S. 1764. A bill to provide incentives to increase research by
commercial, for-profit entities to develop vaccines, microbicides,
diagnostic technologies, and other drugs to prevent and treat illnesses
associated with a biological or chemical weapons attack; to the
Committee on Finance.
Mr. LIEBERMAN. Mr. President, America has a major flaw in its
defenses against bioterrorism. Recent hearings I chaired in the
Government Affairs Committee on bioterrorism demonstrated that America
has not made a national commitment to research and development of
treatments and cures for those who might be exposed to or infected by a
biological agent or chemical toxin. Correcting this critical gap is the
purpose of legislation I am introducing today.
Obviously, our first priority must be to attempt to prevent the use
of these agents and toxins by terrorists, quickly assess when an attack
has occurred, take appropriate public health steps to contain the
exposure, stop the spread of contagion, and then detoxify the site.
These are all critical functions, but in the end we must recognize that
some individuals may be exposed or infected. Then the critical issue is
whether we can treat and cure them and prevent death and disability.
We need a diversified portfolio of medicines. In cases where we have
ample advance warning of an attack and specific information about the
agent or toxin, we may be able to vaccinate the vulnerable population
in advance. In other cases, even if we have a vaccine, we might well
prefer to use medicines that would quickly stop the progression of the
disease or the toxic effects. We also need a powerful capacity quickly
to develop new countermeasures where we face a new agent or toxin.
Unfortunately, we are woefully short of vaccines and medicines to
treat individuals who are exposed or infected. We have antibiotics that
seem to work for most of those infected in the current anthrax attack,
but these have not prevented five deaths. We have no effective vaccines
or medicines for most other biological agents and chemical toxins we
might confront. In some cases we have vaccines to prevent, but no
medicines to treat, an agent. We have limited capacity to speed the
development of vaccines and medicines to prevent or treat novel agents
and toxins not currently known to us.
We have provided, and should continue to provide, direct Federal
funding for research and development of new medicines, however, this
funding is unlikely to be sufficient. Even with ample Federal funding,
many private companies will be reluctant to enter into agreements with
government agencies to conduct this research. Other companies would be
willing to conduct the research with their own capital and at their own
risk but are not able to secure the funding from investors.
The legislation I introduce today would provide incentives for
private biotechnology companies to form capital to develop
countermeasures, medicines, to prevent, treat and cure victims of
bioterror attacks. This will enable this industry to become a vital
part of the national defense infrastructure and do so for business
reasons that make sense for their investors on the bottom line.
Enactment of these incentives is necessary as most biotech companies
have no approved products or revenue from product sales to fund
research. They rely on investors and equity capital markets to fund the
research. They must necessarily focus on research that will lead to
product sales and revenue and, thus, to an end to their dependence on
investor capital. There is no established or predictable market for
countermeasures. Investors are justifiably reluctant to fund this
research, which will present challenges similar in complexity to AIDS.
Investors need assurances that research on countermeasures has the
potential to provide a rate of return commensurate with the risk,
complexity and cost of the research, a rate of return comparable to
that which may arise from a treatment for cancer, MS, Cystic Fibrosis
and other major diseases.
It is in our national interest to enlist these companies in the
development of countermeasures as biotech companies tend to be
innovative and nimble and intently focused on the intractable diseases
for which no effective medical treatments are available.
The incentives I have proposed are innovative and some may be
controversial. I invite everyone who has an interest and a stake in
this research to enter into a dialogue about the issue and about the
nature and terms of the appropriate incentives. I have attempted to
anticipate the many complicated technical and policy issues that this
legislation raises. The key focus of our debate should be how, not
whether, we address this critical gap in our public health
infrastructure and the role that the private sector should play.
Millions of Americans will be at risk if we fail to enact legislation
to meet this need.
My proposal is complimentary to legislation on bioterrorism
preparedness sponsored by Senators Frist and Kennedy. Their bill, the
Bioweapons Preparedness Act of 2001, S. 1715, focuses on many needed
improvements in our public health infrastructure. It builds on their
proposal in the 106th Congress, S. 2731, and H.R. 4961, sponsored by
Congressman Richard Burr.
Among the provisions in these bills are initiatives on improving
bioterrorism preparedness capacities, improving communication about
bioterrorism, protection of children, protection of food safety, and
global pathogen surveillance and response. The Senate Appropriations
Committee reported legislation to appropriate the funds for the
purposes authorized in the Frist-Kennedy proposal and that was
incorporated in the stimulus package pending in the Senate before the
Thanksgiving recess.
Title IV of their bill includes provisions to expand research on
biological agents and toxins, as well as new treatments and vaccines
for such agents and
[[Page S12377]]
toxins. Since the effectiveness of vaccines, drugs, and therapeutics
for many biological agents and toxins often may not ethically be tested
in humans, the bill ensures that the Food and Drug Administration, FDA,
will finalize by a date certain its rule regarding the approval of new
countermeasures on the basis of animal data. Priority countermeasures
will also be given enhanced consideration for expedited review by the
FDA. They rely on the authority, through an existing Executive Order,
to ensure indemnification of sponsors who supply vaccines to the
Government. And the bill provides a limited antitrust exemption to
allow potential sponsors to discuss and agree upon how to develop,
manufacture, and produce new countermeasures, including vaccines, and
drugs. Federal Trade Commission and the Department of Justice approval
of such agreements is required to ensure such agreements are not anti-
competitive.
My legislation builds on these provisions by providing incentives to
enable the biotechnology industry acting on its own initiative to fund
and conduct research on countermeasures. It includes tax, procurement,
intellectual property and liability incentives. Accordingly, my
proposal raises issues falling within the jurisdiction of the HELP,
Finance, and Judiciary Committees.
The Frist-Kennedy bill and my bill are complimentary. We do need to
conform the two bills to one another on some issues: the bills have
different definitions of the term ``countermeasure,'' my bill gives the
Director of Homeland Defense authority over the countermeasure list
whereas the Secretary of Health and Human Services would have authority
under Frist/Kennedy, and my bill establishes a ``purchase fund'' and
Frist-Kennedy is a ``stockpile.'' The best, most comprehensive approach
would be to meld the two bills together.
The bottom line is that we need both bills, one focusing on public
health and one focusing on medical research. Without medical research,
public health workers will not have the single most important tool to
use in an attack, medicine to prevent death and disability and medicine
that will help us avoid public panic.
We are fortunate that we have broad-spectrum antibiotics including
Cipro to treat the type of anthrax to which so many have been exposed.
This treatment seems to be effective before the anthrax symptoms become
manifest, and effective to treat cutaneous anthrax, and we have been
able to effectively treat some individuals who have inhalation anthrax.
I am thankful that this drug exists to treat those who have been
exposed, including my own Senate staff. Our offices are immediately
above those of Senator Daschle.
We have seen how reassuring it is that we have an effective treatment
for this biological agent. We see long lines of Congressional staffers
and postal workers awaiting their Cipro. Think what it would be like if
we could only say, ``We have nothing to treat you and hope you don't
contract the disease.'' Think of the public panic that we might see.
I am grateful that this product exists and proud of the fact that the
Bayer Company is based in Connecticut. The last thing we should be
doing is criticizing this company for their research success. The
company has dispensed millions of dollars worth of Cipro free of
charge. Criticizing it for the price that it charges tells other
research companies that the more valuable their products are in
protecting the public health, the more likely they are to be criticized
and bullied.
It is fortuitous that Cipro seems to be effective against anthrax.
The product was not developed with this use in mind. My point with this
legislation is we cannot rely on good fortune and chance in the
development of countermeasures. We need to make sure that these
countermeasures will be developed. We need more companies like Bayer,
we need them focused specifically on developing medicines to deal with
the new bioterror threat, and we need to tell them that there are good
business reasons for this focus.
We also are fortunate to have an FDA-licensed vaccine, made by
BioPort Corporation, that is recommended by our country's medical
experts at the DOD and CDC for pre-anthrax exposure vaccination of
individuals in the military and some individuals in certain laboratory
and other occupational settings where there is a high risk of exposure
to anthrax. This vaccine is also recommended for use with Cipro after
exposure to anthrax to give optimal and long-lasting protection. That
vaccine is not now available for use. We must do everything necessary
to make this and other vaccines available in adequate quantities to
protect against future attacks. But the point of this legislation is
that we need many more Cipro-like and antrax vaccine-like products.
That we have these products is the good news; that we have so few
others is the problem.
One unfortunate truth in this debate is that we cannot rely upon
international legal norms and treaties alone to protect our citizens
from the threat of biological or chemical attack.
The United States ratified the Biological and Toxin Weapons
Convention, BWC, on January 22, 1975. That Convention now counts 144
nations as parties. Twenty-two years later, on April 24, 1997, the
United States Senate joined 74 other countries when it ratified the
Chemical Weapons Convention, CWC. While these Conventions serve
important purposes, they do not in any way guarantee our safety in a
world with rogue states and terrorist organizations.
The effectiveness of both Conventions is constrained by the fact that
many countries have failed to sign on to either of them. Furthermore,
two signatories of the BWC, Iran and Iraq, are among the seven
governments that the Secretary of State has designated as state
sponsors of international terrorism, and we know for a fact that they
have both pursued clandestine biological weapons programs. The BWC,
unlike the CWC, has no teeth, it does not include any provisions for
verification or enforcement. Since we clearly cannot assume that any
country that signs on to the Convention does so in good faith, the
Convention's protective value is limited.
On November 1 of this year, the President announced his intent to
strengthen the BWC as part of his comprehensive strategy for combating
terrorism. A BWC review conference, held every 5 years to consider ways
of improving the Convention's effectiveness, will convene in Geneva
beginning November 19. In anticipation of that meeting, the President
has urged that all parties to the Convention enact strict national
criminal legislation to crack down on prohibited biological weapons
activities, and he has called for an effective United Nations procedure
for investigating suspicious outbreaks of disease or allegations of
biological weapons use.
These steps are welcomed, but they are small. Even sweeping reforms,
like creating a more stringent verification and enforcement regime,
would not guarantee our safety. The robust verification and enforcement
mechanisms in the CWC, for instance, have proven to be imperfect, and
scientists agree that it is much easier to conceal the production of
biological agents than chemical weapons.
The inescapable fact, therefore, is that we cannot count on
international regimes to prevent those who wish us ill from acquiring
biological and chemical weapons. We must be prepared for the reality
that these weapons could fall into the hands of terrorists, and could
be used against Americans on American soil. And we must be prepared to
treat the victims of such an attack if it were ever to occur.
On November 26, the Centers for Disease Control issued its interim
working draft plan for responding to an outbreak of smallpox. The plan
does not call for mass vaccination in advance of a smallpox outbreak
because the risk of side effects from the vaccine outweighs the risks
of someone actually being exposed to the smallpox virus. At the heart
of the plan is a strategy sometimes called ``search and containment.''
This strategy involves identifying infected individual or individuals
with confirmed smallpox, identifying and locating those people who come
in contact with that person, and vaccinating those people in outward
rings of contact. The goal is to produce a buffer of immune individuals
and was shown to prevent smallpox and to ultimately eradicate the
outbreak. Priorities
[[Page S12378]]
would be set on who is vaccinated, perhaps focusing on the outward
rings before those at the center of the outbreak. The plan assumes that
the smallpox vaccination is effective for persons who have been exposed
to the disease as long as the disease has not taken hold.
In practice it may be necessary to set a wide perimeter for these
areas because smallpox is highly contagious before it might be
diagnosed. There may be many areas subject to search and containment
because people in our society travel frequently and widely. Terrorists
might trigger attacks in a wide range of locations to multiply the
confusion and panic. The most common form of smallpox has a 30-percent
mortality rate, but terrorists might be able to obtain supplies of
``flat-type'' smallpox with a mortality rate of 96 percent and
hemorrhagic-type smallpox, which is almost always fatal. For these
reasons, the CDC plan accepts the possibility that whole cities or
other geographic areas could be cordoned off, letting no one in or out,
a quarantine enforced by police or troops.
The plan focuses on enforcement authority through police or National
Guard, isolation and quarantine, mandatory medical examinations, and
rationing of medicines. It includes a discussion of ``population-wide
quarantine measures which restrict activities or limit movement of
individuals [including] suspension of large public gatherings, closing
of public places, restriction on travel [air, rail, water, motor
vehicle, and pedestrian], and/or `cordon sanitaire' [literally a
`sanitary cord' or line around a quarantined area guarded to prevent
spread of disease by restricting passage into or out of the area].''
The CDC recommends that States update their laws to provide authority
for ``enforcing quarantine measures'' and it recommends that States in
``pre-event planning'' identify ``personnel who can enforce these
isolation and quarantine measures, if necessary.'' Guide C, Isolation
and Quarantine, page 17.
On October 23, 2001, the CDC published a ``Model State Emergency
Health Powers Act.'' It was prepared by the Center for Law and the
Public's Health at Georgetown and Johns Hopkins Universities, in
conjunction with the National Governors Association, National
Conference of State Legislatures, Association of State and Territorial
Health Officials, National Association of City and County Health
Officers, and National Association of Attorneys General. A copy of the
model law is printed at www.publichealthlaw.net. The law would provide
powers to enforce the ``compulsory physical separation, including the
restriction of movement or confinement, of individuals and/or groups
believed to have been exposed to or known to have been infected with a
contagious disease from individuals who are believed not to have been
exposed or infected, in order to prevent or limit the transmission of
the disease to others.'' Federal law on this subject is very strong and
the Administration can always rely on the President's Constitution
authority as Commander in Chief.
Let us try to imagine, however, what it would be like if a quarantine
is imposed. Let us assume that there is not enough smallpox vaccine
available for use in a large outbreak, that the priority is to
vaccinate those in the outward rings of the containment area first,
that the available vaccines cannot be quickly deployed inside the
quarantined area, that it is not possible to quickly trace and identify
all of the individuals who might have been exposed, and/or that public
health workers themselves might be infected. We know that there is no
medicine to treat those who do become infected. We know the mortality
rates. It is not hard to imagine how much force might be necessary to
enforce the quarantine. It would be quite unacceptable to permit
individuals to leave the quarantined area no matter how much panic had
taken hold.
Think about how different this scenario would be if we had medicines
that could effectively treat and cure those who become infected by
smallpox. We still might implement the CDC plan but a major element of
the strategy would be to persuade people to visit their local clinic or
hospital to be dispensed their supply of medicine. We could trust that
there would be a very high degree of voluntary compliance. This would
give us more time, give us options if the containment is not
successful, give us options to treat those in the containment area who
are infected, and enable us to quell the public panic.
Because we have no medicine to treat those infected by smallpox, we
have to be prepared to implement a plan like the one CDC has proposed.
Theirs is the only option because our options are so limited. We need
to expand our range of options.
We should not be lulled by the apparent successes with Cipro and the
strains of anthrax we have seen in the recent attacks. We have not been
able to prevent death in some of the patients with late-stage
inhalation anthrax and Robert Stevens, Thomas Morris Jr., Joseph
Curseen, Kathy Nguyen, and Ottilie Lundgren have died. This legislation
is named in honor of them. What we needed for them, and did not have,
is a drug or vaccine that would treat late stage inhalation anthrax.
As I have said, we need an effective treatment for those who become
infected with smallpox. We have a vaccine that effectively prevents
smallpox infection, and administering this vaccine within four days of
first exposure has been shown to offer some protections against
acquiring infection and significant protection against a fatal outcome.
The problem is that administering the vaccine in this time frame to all
those who might have been exposed may be exceedingly difficult. And
once infection has occurred, we have no effective treatment options.
In the last century 500 million people have died of smallpox, more
than have from any other infectious diseases, as compared to 320
million deaths in all the wars of the twentieth century. Smallpox was
one of the diseases that nearly wiped out the entire Native American
population in this hemisphere. The last naturally acquired case of
smallpox occurred in Somalia in 1977 and the last case from laboratory
exposure was in 1978.
Smallpox is a nasty pathogen, carried in microscopic airborne
droplets inhaled by its victims. The first signs are headache, fever,
nausea and backache, sometimes convulsions and delirium. Soon, the skin
turns scarlet. When the fever lets up, the telltale rash appears, flat
red spots that turn into pimples, then big yellow pustules, then scabs.
Smallpox also affects the throat and eyes, and inflames the heart,
lungs, liver, intestines and other internal organs. Death often came
from internal bleeding, or from the organs simply being overwhelmed by
the virus. Survivors were left covered with pockmarks, if they were
lucky. The unlucky ones were left blind, their eyes permanently clouded
over. Nearly one in four victims died. The infection rate is estimated
to be 25-40 percent for those who are unvaccinated and a single case
can cause 20 or more additional infections.
During the 16th Century, 3.5 million Aztecs, more than half the
population, died of smallpox during a 2-year span after the Spanish
army brought the disease to Mexico. Two centuries later, the virus
ravaged George Washington's troops at Valley Forge. And it cut a deadly
path through the Crow, Dakota, Sioux, Blackfoot, Apache, Comanche and
other American Indian tribes, helping to clear the way for white
settlers to lay claim to the western plains. The epidemics began to
subside with one of medicine's most famous discoveries: the finding by
British physician Edward Jenner in 1796 that English milkmaids who were
exposed to cowpox, a mild second cousin to smallpox that afflicts
cattle, seemed to be protected against the more deadly disease.
Jenner's work led to the development of the first vaccine in Western
medicine. While later vaccines used either a killed or inactivated form
of the virus they were intended to combat, the smallpox vaccine worked
in a different way. It relied on a separate, albeit related virus:
first cowpox and the vaccinia, a virus of mysterious origins that is
believed to be a cowpox derivative. The last American was vaccinated
back in the 1970s and half of the U.S. population has never been
vaccinated. It is not known how long these vaccines provide protection,
but it is estimated that the term is 3-5 years.
In an elaborate smallpox biowarfare scenario enacted in February 1999
by
[[Page S12379]]
the Johns Hopkins Center for Civilian Biodefense Studies, it was
projected that within 2 months 15,000 people had died, epidemics were
out of control in fourteen countries, all supplies of smallpox vaccine
were depleted, the global economy was on the verge of collapse, and
military control and quarantines were in place. Within twelve months it
was projected that eighty million people worldwide had died.
A single case of smallpox today would become a global public health
threat and it has been estimated that a single smallpox bioterror
attack on a single American city would necessitate the vaccination of
30-40 million people.
The U.S. Government is now in the process of purchasing substantial
stocks of the smallpox vaccine. We then face a very difficult decision
on deploying the vaccine. We know that some individuals will have an
adverse reaction to this vaccine. No one in the United States has been
vaccinated against smallpox in 25 years. Those that were vaccinated
back then may not be protected against the disease today. If we had an
effective treatment for those who might become infected by smallpox, we
would face much less pressure regarding deploying the vaccine. If we
face a smallpox epidemic from a bioterrorism attack, we will have no
Cipro to reassure the public and we will be facing a highly contagious
disease and epidemic. To be blunt, it will make the current anthrax
attack look benign by comparison.
Smallpox is not the only threat. We have seen other epidemics in this
century. The 1918 influenza epidemic provides a sobering admonition
about the need for research to develop medicines. In 2 years, a fifth
of the world's population was infected. In the United States the 1918
epidemic killed more than 650,000 people in a short period of time and
left 20 million seriously ill, one-fourth of the entire population. The
average lifespan in the U.S. was depressed by ten years. In just 1
year, the epidemic killed 21 million human beings worldwide--well over
twice the number of combat deaths in the whole of World War I. The flu
was exceptionally virulent to begin with and it then underwent several
sudden and dramatic mutations in its structure. Such mutations can turn
flu into a killer because its victims' immune systems have no
antibodies to fight off the altered virus. Fatal pneumonia can rapidly
develop.
Another deadly toxin, ricin toxin, was of interest to the al-Qaeda
terrorist network. At an al-Qaeda safehouse in Saraq Panza, Kabul
reporters found instructions for making ricin. The instructions make
chilling reading. ``A certain amount, equal to a strong dose, will be
able to kill an adult, and a dose equal to seven seeds will kill a
child,'' one page reads. Another page says: ``Gloves and face mask are
essential for the preparation of ricin. Period of death varies from 3-5
days minimum, 4-14 days maximum.'' The instructions listed the symptoms
of ricin as vomiting, stomach cramps, extreme thirst, bloody diarrhoea,
throat irritation, respiratory collapse and death.
No specific treatment or vaccine for ricin toxin exists. Ricin is
produced easily and inexpensively, highly toxic, and stable in
aerosolized form. A large amount of ricin is necessary to infect whole
populations, the amount of ricin necessary to cover a 100-km \2\ area
and cause 50 percent lethality, assuming aerosol toxicity of 3 mcg/kg
and optimum dispersal conditions, is approximately 4 metric tons,
whereas only 1 kg of Bacillus anthracis is required. But it can be used
to terrorize a large population with great effect because it is so
lethal.
Use of ricin as a terror weapon is not theoretical. In 1991 in
Minnesota, 4 members of the Patriots Council, an extremist group that
held antigovernment and antitax ideals and advocated the overthrow of
the U.S. Government, were arrested for plotting to kill a U.S. marshal
with ricin. The ricin was produced in a home laboratory. They planned
to mix the ricin with the solvent dimethyl sulfoxide, DMSO, and then
smear it on the door handles of the marshal's vehicle. The plan was
discovered, and the 4 men were convicted. In 1995, a man entered Canada
from Alaska on his way to North Carolina. Canadian custom officials
stopped the man and found him in possession of several guns, $98,000,
and a container of white powder, which was identified as ricin. In
1997, a man shot his stepson in the face. Investigators discovered a
makeshift laboratory in his basement and found agents such as ricin and
nicotine sulfate. And, ricin was used by the Bulgarian secret police
when they killed Georgi Markov by stabbing him with a poison umbrella
as he crossed Waterloo Bridge in 1978.
Going beyond smallpox, influenza, and ricin, we do not have an
effective vaccine or treatment for dozens of other deadly and disabling
agents and toxins. Here is a partial list of some of the other
biological agents and chemical toxins for which we have no effective
treatments: clostridium botulinum toxin, botulism; francisella
tularensis, tularaemia; Ebola hemorrhagic fever, Marbug hemorrhagic
fever, Lassa fever, Julin, Argentine hemorrhagic fever; Coxiella
burnetti, Q fever; brucella species, brucellosis; burkholderia mallei,
glanders; Venezuelan encephalomyelitis, eastern and western equine
encephalomyelitis, epsilon toxin of clostridium perfringens,
staphylococcus entretoxin B, salmonella species, shigella dysenteriae,
escherichia coli O157:H7, vibrio cholerae, cryptosporidium parvum,
nipah virus, hantaviruses, tickborne hemorrhagic fever viruses,
tickborne encephalitis virus, yellow fever, nerve agents, tabun, sarin,
soman, GF, and VX; blood agents, hydrogen cyanide and cyanogens
chloride; blister agents, lewisite, nitrogenadn sulfur mustards, and
phosgene oxime; heavy metals, arsenic, lead, and mercury; and volatile
toxins, benzene, chloroform, trihalomethanes; pulmonary agents,
Phosgene, chlorine, vinly chloride; and incapacitating agents, BZ.
The naturally occurring forms of these agents and toxins are enough
to cause concern, but we also know that during the 1980s and 1990s the
Soviet Union conducted bioweapons research at 47 laboratories and
testing sites, employed nearly 50,000 scientists in the work, and that
they developed genetically modified versions of some of these agents
and toxins. The goal was to develop an agent or toxin that was
particularly virulent or not vulnerable to available antibiotics.
The United States has publicly stated that five countries are
developing biological weapons in violation of the Biological Weapons
convention, North Korea, Iraq, Iran, Syria, and Libya, and stated that
additional countries not yet named, possibly including Russia, China,
Israel, Sudan and Egypt, are also doing so as well.
What is so insidious about biological weapons is that in many cases
the symptoms resulting from a biological weapons attack would likely
take time to develop, so an act of bioterrorism may go undetected for
days or weeks. Affected individuals would seek medical attention not
from special emergency response teams but in a variety of civilian
settings at scattered locations. This means we will need medicines that
can treat a late stage of the disease, long after the infection has
taken hold.
We must recognize that the distinctive characteristic of biological
weapons is that they are living micro-organisms and are thus the only
weapons that can continue to proliferate without further assistance
once released in a suitable environment.
The lethality of these agents and toxins, and the panic they can
cause, is quite frightening. The capacity for terror is nearly beyond
comprehension. I do not believe it is necessary to describe the facts
here. My point is simple: we need more than military intelligence,
surveillance, and public health capacity. We also need effective
medicines. We also need more powerful research tools that will enable
us to quickly develop treatments for agents and toxins not on this or
any other list.
We need to do whatever it takes to be able to reassure the American
people that hospitals and doctors have powerful medicines to treat them
if they are exposed to biological agents or toxins, that we can contain
an outbreak of an infectious agent, and that there is little to fear.
To achieve this objective, we need to rely on the entrepreneurship of
the biotechnology industry.
There is already some direct funding of research by the Defense
Advanced Research Projects Agency, DARPA, the National Institutes of
Health, NIH, and the Centers for Disease Control, CDC. This research
should go forward.
[[Page S12380]]
DARPA, for instance, has been described as the Pentagon's ``venture
capital fund,'' its mission to provide seed money for novel research
projects that offer the potential for revolutionary findings. Last
year, DARPA's Unconventional Pathogen Countermeasures program awarded
contracts totalling $50 million to universities, foundations,
pharmaceutical and biotechnology companies seeking new ways to fight
biological agents and toxins.
The Unconventional Pathogen Countermeasures program now funds 43
separate research efforts on anti-bacterials, anti-toxins, anti-virals,
decontamination, external protection from pathogens, immunization and
multi-purpose vaccines and treatments. A common thread among many of
these undertakings is the goal of developing drugs that provide broad-
spectrum protection against several different pathogens. This year,
with a budget of $63 million, the program has received over 100
research proposals in the last two months alone.
Some of this DARPA research is directed at developing revolutionary,
broad-spectrum, medical countermeasures against significantly
pathogenic microorganisms and/or their pathogenic products. The goal is
to develop countermeasures that are versatile enough to eliminate
biological threats, whether from natural sources or modified through
bioengineering or other manipulation. The countermeasures would need
the potential to provide protection both within the body and at the
most common portals of entry, e.g., inhalation, ingestion,
transcutaneous. The strategies might include defeating the pathogen's
ability to enter the body, traverse the bloodstream or lymphatics, and
enter target tissues; identifying novel pathogen vulnerabilities based
on fundamental, critical molecular mechanisms of survival or
pathogenesis, e.g., Type III secretion, cellular energetics, virulence
modulation; constructing unique, robust vehicles for the delivery of
countermeasures into or within the body; and modulating the
advantageous and/or deleterious aspects of the immune response to
significantly pathogenic microorganisms and/or the pathogenic products
in the body
While DAPRA's work is specifically aimed at protecting our military
personnel, the National Institutes of Health also spent $49.7 million
in the last fiscal year to find new therapies for those who contract
smallpox and on systems for detecting the disease. In recent years,
NIH's research programs have sought to create more rapid and accurate
diagnostics, develop vaccines for those at risk of exposure to
biological agents, and improve treatment for those infected. Moreover,
in the last fiscal year, the Centers for Disease Control has allocated
$18 million to continue research on an anthrax vaccine and $22.4
million on smallpox research.
Some companies are willing to enter into a research relationships
funded by DARPA and other agencies to develop countermeasures.
Relationships between the Government and private industry can be very
productive, but they can also involve complex issues reflecting the
different cultures of government and industry. Some companies,
including some of the most entrepreneurial, might prefer to take their
own initiative to conduct this research. Relationships with government
entities involve risks, issues, and bureaucracy that are not present in
relationships among biotechnology companies and between them and non-
governmental partners.
The Defense Departments Joint Vaccine Acquisition Program, JVAP,
illustrates the problems with a government led and managed program. A
report in December 2000 by a panel of independent experts found that
the current program ``is insufficient and will fail'' and recommended
it adopt an approach more on the model of a private sector effort. It
needs to adopt ``industry practices,'' ``capture industry interest,''
``implement an organizational alignment that mirrors the vaccine
industry's short chain of command and decision making,'' ``adopt an
industry-based management philosophy,'' and ``develop a sound
investment strategy.'' It bemoaned the ``extremely limited'' input from
industry in the JVAP program.
It is clear from this experience that we should not rely exclusively
on government funding of countermeasures research. We should take
advantage of the entrepreneurial fervor, and the independence, of our
biotechnology industry entrepreneurs. It is not likely that the
Government will be willing or able to provide sufficient funding for
the development of the countermeasures we need. Some of the most
innovative approaches to vaccines and medicines might not be funded
with the limited funds available to the Government. We need to provide
incentives that will encourage every biotech company to review its
research priorities and technology portfolio for its relevance and
potential for countermeasure research. Some of this research is early
stage, basic research that is being developed and considered only for
its value in treating an entirely different disease. We need to kindle
the imagination of biotechnology companies and their tens of thousands
of scientists regarding countermeasures research.
My proposal would supplement direct Federal government funding of
research with incentives that make it possible for private companies to
form the capital to conduct this research on their own initiative,
utilizing their own capital, and at their own risk, all for good
business reasons going to their bottom line.
The U.S. biotechnology industry, approximately 1,300 companies, spent
$13.8 billion on research last year. Only 350 of these companies have
managed to go public. The industry employs 124,000, Ernest & Young
data, people. The top five companies spent an average of $89,000 per
employee on research, making it the most research-intensive industry in
the world. The industry has 350 products in human clinical trials
targeting more than 200 diseases. Losses for the industry were $5.8
billion in 2001, $5.6 billion in 2000, $4.4 billion in 1999, $4.1
billion in 1998, $4.5 billion in 1997, $4.6 billion in 1996, and
similar amounts before that. In 2000 fully 38 percent of the public
biotech companies had less than 2 years of funding for their research.
Only one-quarter of the biotech companies in the United States are
publicly traded and they tend to be the best funded.
There is a broad range of research that could be undertaken under
this legislation. Vaccines could be developed to prevent infection or
treat an infection from a bioterror attack. Broad-spectrum antibiotics
are needed. Also, promising research has been undertaken on antitoxins
that could neutralize the toxins that are released, for example, by
anthrax. With anthrax it is the toxins, not the bacteria itself, that
cause death. An antitoxin could act like a decoy, attaching itself to
sites on cells where active anthrax toxin binds and then combining with
normal active forms of the toxin and inactivating them. An antitoxin
could block the production of the toxin.
We can rely on the innovativeness of the biotech industry, working in
collaboration with academic medical centers, to explore a broad range
of innovative approaches. This mobilizes the entire biotechnology
industry as a vital component of our national defense against bioterror
weapons.
The legislation takes a comprehensive approach to the challenges the
biotechnology industry faces in forming capital to conduct research on
countermeasures. It includes capital formation tax incentives,
guaranteed purchase funds, patent protections, and liability
protections. I believe we will have to include each of these types of
incentives to ensure that we mobilize the biotechnology industry for
this urgent national defense research.
I am aware that all three of the tax incentives I have proposed, and
both of the two patent incentives I have proposed, may be
controversial. In my view, we can debate tax or patent policy as long
as you want, but let's not lose track of the issue here, development of
countermeasures to treat people infected or exposed to lethal and
disabling bioterror weapons.
We know that incentives can spur research. In 1983 we enacted the
Orphan Drug Act to provide incentives for companies to develop
treatments for rare diseases with small potential markets deemed to be
unprofitable by the industry. In the decade before this legislation was
enacted, fewer than 10 drugs for orphan diseases were developed and
these were mostly chance discoveries. Since the Act became law, 218
[[Page S12381]]
orphan drugs have been approved and 800 more are in the pipeline. The
Act provides 7 years of market exclusivity and a tax credit covering
some research costs. The effectiveness of the incentives we have
enacted for orphan disease research show us how much we can accomplish
when we set a national priority for certain types of research.
The incentives I have proposed differ from those set by the Orphan
Drug Act. We need to maintain the effectiveness of the Orphan Drug Act
and not undermine it by adding many other disease research targets. In
addition, the tax credits for research for orphan drug research have no
value for most biotechnology companies because few of them have tax
liability with respect to which to claim the credit. This explains why
I have not proposed to utilize tax credits to spur countermeasures
research. It is also clear that the market for countermeasures is even
more speculative than the market for orphan drugs and we need to enact
a broader and deeper package of incentives.
The Government determines which research is covered by the
legislation. The legislation confers on the Director of the Office of
Homeland Security, in consultation with the Secretary of Defense and
Secretary of Health and Human Services, authority to set the list of
agents and toxins with respect to which the legislation applies. The
Director determines which agents and toxins present a threat and on
whether the countermeasures are more likely to be developed with the
application of the incentives of the legislation. The Director may
determine that an agent or toxin does not present a threat or that
countermeasures are not more likely to be developed with the
incentives. The legislation includes an illustrative list of agents and
toxins that might be selected by the Director. The decisions of the
Director are final and cannot be subject to judicial review.
Once the list of agents and toxins is set, companies may register
with the Food and Drug Administration their intent to undertake
research and development of a countermeasure to prevent or treat the
agent or toxin. This registration is required only for companies that
seek to be eligible for the tax, purchase, patent, and liability
provisions of the legislation. The registration does not apply to non-
profit entities or to companies that do not seek such eligibility. The
registration requirement gives the FDA vital information about the
research effort and the personnel involved with the research.
The Director of the Office of Homeland Security then may certify that
the company is eligible for the tax, purchase, patent, and liability
incentives in the legislation. Eligibility for the purchase fund,
patent and liability incentives is contingent on successful development
of a countermeasure according to the standards set in the legislation.
The legislation contemplates that a company might well register and
seek certification with respect to more than one research project and
become eligible for the tax, purchase, patent, and liability incentives
for each. There is no policy rationale for limiting a company to one
registration and one certification.
This process is similar to the current registration process for
research on orphan, rare, diseases. In that case, companies that are
certified by the FDA become eligible for both tax and market
exclusivity incentives. This process gives the Government complete
control on the number of registrations and certifications. This gives
the Government control over the cost and impact of the legislation on
private sector research.
The legislation includes three tax incentives to enable biotechnology
companies to form capital to fund research and development of
countermeasures. Companies must irrevocably elect only one of the
incentives with regard to the research. These tax incentives are
available only to biotechnology companies with less than $750,000,000
in paid-in capital.
The paid-in capital of a corporation is quite distinct from the
market capitalization of the firm. The paid-in capital is the aggregate
amount paid by investors into the corporation when this stock was
issued, the price at issue multiplied by the number of shares sold. The
market capitalization is the value of this stock in the stock market as
it is traded among investors. I have focused on the paid-in capital as
this is the amount of capital actually available to the corporation to
fund its research.
The legislation includes three different tax incentives to give
companies flexibility in forming capital to fund the research. Each of
the options comes with advantages and limitations that may make it
appropriate or inappropriate for a given company or research project.
We do not now know fully how investors and capital markets will respond
to the different options, but we assume that companies will consult
with the investor community about which option will work best for a
given research project. Capital markets are diverse and investors have
different needs and expectations. Over time these markets and investor
expectations evolve. If companies register for more than one research
project, they may well utilize different tax incentives for the
different projects.
Companies are permitted to undertake a series of discrete and
separate research projects and make this election with respect to each
project. They may only utilize one of the options with respect to each
of these research projects.
The company is eligible to establish an R&D Limited Partnership to
conduct the research. The partnership passes through all business
deductions and credits to the partners. For example, under this
arrangement, the research and development tax credits and depreciation
deductions for the company may be passed by the corporation through to
its partners to be used to offset their individual tax liability. These
deductions and credits are then lost to the corporation.
The company is eligible to issue a special class of stock for the
entity to conduct the research. The investors would be entitled to a
zero capital gains tax rate on any gains realized on the stock held for
at least 3 years. This is a modification of the current Section 1202
where only 50 percent of the gains are not taxed. This provision is
adapted from legislation I have introduced, S. 1134, and introduced in
the House by Representatives Dunn and Matsui, H.R. 2383. A similar bill
has been introduced by Senator Collins, S. 455.
The company is eligible to receive refunds for Net Operating Losses,
NOLs, to fund the research. Under current law, net operating losses can
only be used to offset a company's tax liability. If a company has no
profits and therefore no tax liability, it cannot use its net operating
losses. It can carry them forward, but the losses have no current
value. This option would allow the company to receive a refund of its
NOLs at a rate of 75 percent of their value. Once the company becomes
profitable, and incurs tax liability, it must repay all of the refunds
it has received. The provision in my legislation is adapted from bills
introduced by Senator Torricelli, S. 1049, and Congressman Robert
Matsui, H.R. 2153.
A company that elects to utilize one of these incentives is not
eligible to receive benefits of the Orphan Drug Tax Credit. Companies
that can utilize tax credits, companies with taxable income and tax
liability, might find the Orphan Credit more valuable. The legislation
includes an amendment to the Orphan Credit to correct a defect in the
current credit. The amendment has been introduced in the Senate as S.
1341 by Senators Hatch, Kennedy and Jeffords. The amendment simply
states that the Credit is available starting the day an application for
orphan drug status is filed, not the date the FDA finally acts on it.
The amendment was one of many initiatives championed by Lisa J. Raines,
who died on September 11 in the plane that hit the Pentagon, and the
amendment is named in her honor. As we go forward in the legislative
process, I hope we will have an opportunity to speak in more detail
about the service of Ms. Raines on behalf of medical research,
particularly on rare diseases.
My legislation does not include an enhanced tax credit for this
research. Very few biotechnology companies can utilize a tax credit as
they have no taxable revenue and tax liability with respect to which to
claim a credit. Instead, they can carry the credit forward and utilize
it when they do have tax liability. But that may be many years from
now. That is why I have focused on other incentives to assist the
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biotechnology industry to form capital to fund this countermeasures
research.
The guaranteed purchase fund, and the patent bonus and liability
provisions described below provide an additional incentive for
investors to fund the research. Without capital from investors these
biotechnology companies do not have the capacity, irrespective of their
interest, to conduct the research.
The market for countermeasures is speculative and small. This means
that if a company successfully develops a countermeasure, it may not
receive sufficient revenue on sales to justify the risk and expense of
the research. This is why the legislation establishes a countermeasures
purchase fund that will define the market for the products with some
specificity before the research begins.
The fund managers will set standards for which countermeasures it
will purchase and define the financial terms of the purchase
commitment. This will enable companies to evaluate the market potential
of its research before it launches into the project. The specifications
will need to be set with sufficient specificity so that the company,
and its investors, can evaluate the market and with enough flexibility
so that it does not inhibit the innovativeness of the researchers. This
approach is akin to setting a performance standard for a new military
aircraft.
The legislation provides that the purchase fund is not obligated to
purchase more than one product per class. This seeks to avoid a
situation where the Government must purchase more than one product when
it only intends to use one. But it might make more sense, as an
incentive, for the Government to commit to purchasing more than one
product so that many more than one company conducts the research. A
winner-take-all system may well intimidate some companies and we may
end up without a countermeasure to be purchased. It is also possible
that we will find that we need more than one countermeasure because
different products are useful for different patients. We may also find
that the first product developed is not the most effective. Given the
urgency of the research, we would like to have the problem of seeing
more than one effective countermeasure developed. How we reconcile
these competing considerations is a key issue we need to resolve.
My legislation provides that the countermeasure must be approved by
the FDA. The standards that the FDA should apply in reviewing these
types of products is an issue have been discussed in some detail and we
need to fashion the most effective provision on this subject. We need
to recognize that the requirement for FDA approval might, in some
cases, not be needed, appropriate or possible.
The purchase commitment for countermeasures is available to any
company irrespective of its paid-in capital.
Intellectual property protection of research is essential to
biotechnology companies for one simple reason: they need to know that
if they successfully develop a medical product another company cannot
expropriate it. It's a simple matter of incentives.
The patent system has its basis in the U.S. Constitution where the
Federal Government is given the mandate to ``promote the Progress of
Science and the Useful Arts by securing for a limited time to Authors
and Inventors the exclusive right to their respective Writings and
Discoveries.'' In exchange for full disclosure of the terms of their
inventions, inventors are granted the right to exclude others from
making, using, or selling their inventions for a limited period of
time. This quid pro quo provides investors with the incentive to
invent. In the absence of the patent law, discoverable inventions would
be freely available to anyone who wanted to use them and inventors
would not be able to capture the value of their inventions or secure a
return on their investments.
The patent system strikes a balance. Companies receive limited
protection of their inventions if they are willing to publish the terms
of their invention for all to see. At the end of the term of the
patent, anyone can practice the invention without any threat of an
infringement action. During the term of the patent, competitors can
learn from the published description of the invention and may well find
a new and distinct patentable invention.
The legislation provides two types of intellectual property
protection. One simply provides that the term of the patent on the
countermeasure will be the term of the patent granted by the Patent and
Trademark Office without any erosion due to delays in approval of the
product by the Food and Drug Administration. The second provides that a
company that successfully develops a countermeasure will receive a
bonus of 2 years on the term of any patent held by that company.
Companies must elect one of these two protections and only small
biotechnology companies may elect the second protection. Large,
profitable pharmaceutical companies may elect only the first of the two
options.
The first protection against erosion of the term of the patent is an
issue that is partially addressed in current law, the Hatch-Waxman
Patent Term Restoration Act. That act provides partial protection
against erosion of the term, length of a patent when there are delays
at the FDA in approving a product. The erosion occurs when the PTO
issues a patent before the product is approved by the FDA. In these
cases, the term of the patent is running but the company cannot market
the product. The Hatch-Waxman Act provides some protections against
erosion of the term of the patent, but the protections are incomplete.
As a result, many companies end up with a patent with a reduced term,
sometimes substantially reduced.
The issue of patent term erosion has become more serious due to
changes at the PTO in the patent system. The term of a patent used to
be fixed at 17 years from the date the patent was granted by the PTO.
It made no difference how long it took for the PTO to process the
patent application and sometimes the processing took years, even
decades. Under this system, there were cases where the patent would
issue before final action at the FDA, but there were other cases where
the FDA acted to approve a product before the patent was issued.
Erosion was an issue, but it did not occur in many cases.
Since 1995 the term of a patent has been set at 20 years from the
date of application for the patent. This means that the processing time
by the PTO of the application all came while the term of the patent is
running. This gives companies a profound incentive to rush the patent
through the PTO. Under the old system, companies had the opposite
incentive. With patents being issued earlier by the PTO, the issue of
erosion of patent term due to delays at the FDA is becoming more
serious and more common.
The provision in my legislation simply states that in the case of
bioterrorism countermeasures, no erosion in the term of the patent will
occur. The term of the patent at the date of FDA approval will be the
same as the term of the patent when it was issued by the PTO. There is
no extension of the patent, simply protections against erosion. Under
the new 20-year term, patents might be more or less than 17 years
depending on the processing time at the PTO, and all this legislation
says is that whatever term is set by the PTO will govern irrespective
of the delays at the FDA. This option is available to any company that
successfully develops a countermeasure eligible to be purchased by the
fund.
The second option, the bonus patent term, is only available to small
biotechnology companies. It provides that a company that successfully
develops a countermeasure is entitled to a 2-year extension of any
patent in its portfolio. This does not apply to any patent of another
company bought or transferred in to the countermeasure research
company.
I am well aware that this bonus patent term provision will be
controversial with some. A company would tend to utilize this option if
it owned the patent on a product that still had, or might have, market
value at the end of the term of the patent. Because this option is only
available to small biotechnology companies, most of whom have no
product on the market, in most cases they would be speculating about
the value of a product at the end of its patent. The company might
apply this provision to a patent that otherwise would be eroded due to
FDA delays or it might apply it to a patent that was not eroded. The
result might be a patent term that is no longer than the patent term
issued by the PTO. It all depends on which companies elect
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this option and which patent they select. In some cases, the effect of
this provision might be to delay the entry onto the market of lower
priced generics. This would tend to shift some of the cost of the
incentive to develop a countermeasure to insurance companies and
patients with an unrelated disease.
My rationale for including the patent bonus in the legislation is
simple: I want this legislation to say emphatically that we mean
business, we are serious, and we want biotechnology companies to
reconfigure their research portfolios to focus in part on development
of countermeasures. The other provisions in the legislation are
powerful, but they may not be sufficient.
This proposal protects companies willing to take the risks of
producing anti-terrorism products for the American public from
potential losses incurred from lawsuits alleging adverse reactions to
these products. It also preserves the right for plaintiffs to seek
recourse for alleged adverse reactions in Federal District Court, with
procedural and monetary limitations.
Under the plan, the Secretary of HHS is authorized, and in the case
of contractors with HHS, is required, to indemnify and defend persons
engaged in research, development and other activities related to
biological defense products through execution of ``indemnification and
defense agreements.'' An exclusive means of resolving civil cases that
fall within the scope of the indemnification and defense agreements is
provided with litigation rights for injured parties. Non-economic
damages are limited to $250,000 per plaintiff and no punitive or
exemplary damages may be awarded.
Some have tried to apply the existing Vaccine Injury Compensation
Program, VICP, to this national effort. That is inappropriate because
that program will be extremely difficult to use, both administratively
and scientifically. For example, it would take several years to develop
the appropriate ``table'' that identifies a compensable injury.
Companies will be liable during this process. Note that when VICP was
created, there had been studies of what adverse reactions to mandated
childhood vaccines had occurred and the table was based largely on this
experience. Even so, it has taken years of effort, ultimately resulting
in wholesale revisions to the table by regulation, to get the current
table in place. For anti-bioterrorism products currently being
developed, it will simply be impossible to construct a meaningful
Vaccine Injury Table, there will be no experience with the product.
The Frist-Kennedy bill relies on the President's Executive Order
regarding liability protections, so there is a basis for an agreement
regarding this issue as applied to bioterrorism countermeasures. The
provisions that I have proposed are superior to those in the Executive
Order because the order provides protection only on a contract basis.
So, it doesn't provide protection based on the product being developed,
only if that product is being developed under a specific government
contract. Therefore, it's negotiated case by case by HHS and a company.
Your proposal provides assurance to companies, especially small and
medium sized companies, that they will be protected. This will allow
them to go forward with their development plans. Their lawyers may be
leery of trying to negotiate their own deal with HHS. So, the EO may be
effective for a large company when it negotiates making additional
smallpox vaccine, but it provides little assurance to a small company
that wants to start development. Also, the administration says the EO
will be used to protect companies, however, the next
administration could interpret it differently. That's why a statutory
provision will provide greater assurance to companies.
The legislation focuses intently on development of vaccines and
medicines, but it is possible that we will face biological agents and
chemical agents we've never seen before. As I've mentioned, the Soviet
Union bioterror research focused in part on use of genetic modification
technology to develop agents and toxins that currently-available
antibiotics can not treat. Australian researchers accidentally created
a modified mousepox virus, which does not affect humans, but it was 100
percent lethal to the mice. Their research focused on trying to make a
mouse contraceptive vaccine for pest control. The surprise was that it
totally suppressed the ``cell-mediated response,'' the arm of the
immune system that combats viral infection. To make matters worse, the
engineered virus also appears unnaturally resistant to attempts to
vaccinate the mice. A vaccine that would normally protect mouse strains
that are susceptible to the virus only worked in half the mice exposed
to the killer version. If bioterrorists created a human version of the
virus, vaccination programs would be of limited use. This highlights
the drawback of working on vaccines against bioweapons rather than
treatments.
With the advances in gene sequencing, genomics, we will know the
exact genetic structure of a biological agent. This information in the
wrong hands could easily be manipulated to design and possibly grow a
lethal new bacterial and viral strains not found in nature. A scientist
might be able to mix and match traits from different microorganisms,
called recombinant technology, to take a gene that makes a deadly toxin
from one strain of bacteria and introduce it into other bacterial
strains. Dangerous pathogens or infectious agents could be made more
deadly, and relatively benign agents could be designed as major public
health problems. Bacteria that cause diseases such as anthrax could be
altered in such a way that would make current vaccines or antibiotics
against them ineffective. It is even possible that a scientist could
develop an organism that develops resistance to antibiotics at an
accelerated rate.
This means we need to develop technology, research tools, that will
enable us to quickly develop a tailor-made, specific countermeasure to
a previously unknown organism or agent. These research tools will
enable us to develop a tailor-made vaccine or drug to deploy as a
countermeasure against a new threat. The legislation authorizes
companies to register and receive a certification making them eligible
for the tax incentives in the bill for this research.
Perhaps the greatest strength of our biomedical research
establishment in the United States is the synergy between our superb
basic research institutions and private companies. The Bayh-Dole Act
and Stevenson-Wydler Act form the legal framework for mutually
beneficially partnerships between academia and industry. My legislation
strengthens this synergy and these relationships with two provisions,
one to upgrades in the basic research infrastructure available to
conduct research on countermeasures and the other to increase
cooperation between the National Institutes of Health and private
companies.
Research on countermeasures necessitates the use of special
facilities where biological agents can be handled safely without
exposing researchers and the public to danger. Very few academic
institutions or private companies can justify or capitalize the
construction of these special facilities. The Federal Government can
facilitate research and development of countermeasures by financing the
construction of these facilities for use on a fee-for-service basis.
The legislation authorizes appropriations for grants to non-profit and
for-profit institutions to construct, maintain, and manage up to ten
Biosafety Level 3-4 facilities, or their equivalent, in different
regions of the country for use in research to develop countermeasures.
BSL 3-4 facilities are ones used for research on indigenous, exotic or
dangerous agents with potential for aerosol transmission of disease
that may have serious or lethal consequences or where the agents pose
high risk of life-threatening disease, aerosol-transmitted lab
infections, or related agents with unknown risk of transmission. The
Director of the Office and NIH shall issue regulations regarding the
qualifications of the researchers who may utilize the facilities.
Companies that have registered with and been certified by the Director,
to develop countermeasures under Section 5(d) of the legislation, shall
be given priority in the use of the facilities.
The legislation also reauthorizes a very successful NIH-industry
partnership program launched in FY 2000 in Public Law 106-113. The
funding is for partnership challenge grants to promote joint ventures
between NIH and
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its grantees and for-profit biotechnology, pharmaceutical and medical
device industries with regard to the development of countermeasures, as
defined in Section 3 of the bill, and research tools, as defined in
Section 4(d)(3) of the bill. Such grants shall be awarded on a one-for-
one matching basis. So far the matching grants have focused on
development of medicines to treat malaria, tuberculosis, emerging and
resistant infections, and therapeutics for emerging threats. My
proposal should be matched by reauthorization of the challenge grant
program for these deadly diseases.
My legislation is carefully calibrated to provide incentives only
where they are needed. This accounts for the choices in the legislation
about which provisions are available to small biotechnology companies
and large pharmaceutical companies.
Most biotechnology companies rely on infusions of investor capital to
fund research, so the capital formation tax incentives only apply to
them. Large pharmaceutical companies have ample revenues from product
sales, and access to debt capital, so they do not need these incentives
for capital formation.
The guaranteed purchase fund applies to any company that successfully
develops a countermeasure. There is no reason to make any distinction
between small and large companies. They all need to know the terms and
dimensions of the potential market for the products they seek to
develop. With countermeasures the market may well be uncertain or
small, necessitating the creation of the purchase fund.
The patent protection provisions are also well calibrated. Both small
and large companies face the patent term erosion problem due to delays
at the FDA. There is no reason why companies that successfully develop
a countermeasure should end up with a patent with an eroded term.
With regard to the patent bonus provision, this is included to
supplement the capital formation tax incentives for small biotechnology
companies. It provides a dramatic statement to investors that this
research makes good business sense. As capital formation is not a
challenge for a large pharmaceutical company, this patent bonus
provision is not available to them.
Finally, with regard to the liability provisions, there is no reason
to make any distinction between small and large companies.
The legislation makes choices. It sets the priorities. It provides a
dose of incentives and seeks a response in the private sector. We are
attempting here to do something that has not been done before. This is
uncharted territory. And it's also an urgent mission.
There may be cases where a countermeasure developed to treat a
biological toxin or chemical agent will have applications beyond this
use. A broad-spectrum antibiotic capable of treating many different
biological agents may well have the capacity to treat naturally
occurring diseases.
This same issue arises with the Orphan Drug Act, which provides both
tax and FDA approval incentives for companies that develop medicines to
treat rare diseases. In some cases these treatments can also be used
for larger disease populations. There are few who object to this
situation. We have come to the judgment that the urgency of this
research is worth the possible additional benefits that might accrue to
a company.
In the context of research to develop countermeasures, I do not
consider it a problem that a company might find a broader commercial
market for a countermeasure. Indeed, it may well be the combination of
the incentives in this legislation and these broader markets that
drives the successful development of a countermeasure. If our intense
focus on developing countermeasures, and research tools, provides
benefits for mankind going well beyond terror weapons, we should
rejoice. If this research helps us to develop an effective vaccine or
treatment for AIDS, we should give the company the Nobel Prize for
Medicine. If we do not develop a vaccine or treatment for AIDS, we may
see 100 million people die of AIDS. We also have 400 million people
infected with malaria and more than a million annual deaths. Millions
of children die of diarrhea, cholera and other deadly and disabling
diseases. Countermeasures research may deepen our understanding of the
immune system and speed development of treatments for cancer and
autoimmune diseases. That is not the central purpose of this
legislation, but it is an additional rationale for it.
The issue raised by my legislation is very simple: do we want the
Federal Government to fund and supervise much of the research to
develop countermeasures or should we also provide incentives that make
it possible for the private sector, at its own expense, and at its own
risk, to undertake this research for good business reasons. The Frist-
Kennedy legislation focuses effectively on direct Federal funding and
coordination issues, but it does not include sufficient incentives for
the private sector to undertake this research on its own initiative.
Their proposal and mine are perfectly complimentary. We need to enact
both to ensure that we are prepared for bioterror attacks.
I ask unanimous consent that an outline of my legislation appear at
this point in the Record.
There being no objection, the outline was ordered to be printed in
the Record, as follows
Biological and Chemical Weapons Countermeasures Research Act of 2001
The premise of the legislation is that there will be limits
on direct Federal funding of research and development of
countermeasures, vaccines, drugs, and other medicines, to
prevent or treat infections from biological and chemical
agents and toxins. The legislation proposes incentives that
will enable biotechnology companies to take the initiative,
for good business reasons, to conduct research to develop
these countermeasures.
The incentives are needed because most biotech companies
have no approved products or revenue from product sales to
fund research. They rely on investors and equity capital
markets to fund the research. These companies must focus on
research that will lead to product sales and revenue and end
their dependence on investor capital. When they are able to
form the capital to fund research, biotech companies tend to
be innovative and nimble and focused on the intractable
diseases for which no effective medical treatments are
available.
There is no established or predictable market for
countermeasures. Investors are justifiably reluctant to fund
this research, which will present technical challenges
similar in complexity to development of effective treatments
for AIDS. Investors need assurances that research on
countermeasures has the potential to provide a rate of return
commensurate with the risk, complexity and cost of the
research, a rate of return comparable to that which may arise
from a treatment for cancer, MS, Cystic Fibrosis and other
major diseases or from other investments.
The legislation provides tax incentives to enable biotech
companies to form capital to conduct the research. It then
provides a guaranteed and pre-determined market for the
countermeasures and special intellectual property protections
to serve as a substitute for a market. Finally, it
establishes liability protections for the countermeasures
that are developed.
Specifics of the legislation are as follows: one, Office of
Homeland Security sets research priorities in advance.
Biotech companies that seek to be eligible for the incentives
in the legislation must register with the Food and Drug
Administration and be certified as eligible for the
incentives; two, once a company is certified as eligible for
the incentives, it becomes eligible for the tax, purchasing,
patent, and liability provisions. A company is eligible for
certification for the tax and patent provisions if it
seeks to develop a research tool that will make it
possible to quickly develop a countermeasure to a
previously unknown agent or toxin, or an agent or toxin
not targeted for research; three, Capital Formation for
Countermeasures Research: The legislation provides that a
company seeking to fund research is eligible to elect from
among three tax incentives. The three alternatives are as
follows: a. The company is eligible to establish an R&D
Limited Partnership to conduct the research. The
partnership passes through all business deductions and
credits to the partners; b. The company is eligible to
issue a special class of stock for the entity to conduct
the research. The investors would be entitled to a zero
capital gains tax rate on any gains realized on the stock;
and, c. The company is eligible to receive refunds for Net
Operating Losses, NOLs, to fund the research.
These tax incentives are available only to biotechnology
companies with less than $750,000 in paid-in capital.
A company must elect only one of these incentives and, if
it elects one of these incentives, it is then not eligible to
receive benefits under the Orphan Drug Act. The legislation
includes amendments to the Orphan Drug Act championed by
Senators Hatch, Kennedy and Jeffords, S. 1341. The amendments
make the Credit available from the date of the application
for Orphan Drug status, not the date the application is
approved as provided under current law; four, Countermeasure
Purchase Fund: The legislation provides that a company that
successfully develops a countermeasure, through FDA approval,
is eligible to sell the product to the Federal Government at
a pre-established
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price and in a pre-determined amount. The company is given
notice of the terms of the sale before it commences the
research. Sales to this fund may be made by any company
irrespective of its paid-in capital; five, Intellectual
Property Incentives: The legislation provides that a company
that successfully develops a countermeasure is eligible to
elect one of two patent incentives. The two alternatives are
as follows: a. The company is eligible to receive a patent
for its invention with a term as long as the term of the
patent when it was issued by the Patent and Trademark Office,
without any erosion due to delays in the FDA approval
process. This alternative is available to any company that
successfully develops a countermeasure irrespective of its
paid-in capital; b. The company is eligible to extend the
term of any patent owned by the company for two years. The
patent may not be one that is acquired by the company from a
third party. This is included as a capital formation
incentive for small biotechnology companies with less than
$750,000 in paid-in capital.
Six, Liability Protections: The legislation provides for
protections against liability for the company that
successfully develops a countermeasure. This option is
available to any company that successfully develops a
countermeasure irrespective of its paid-in capital; and
seven, Strengthening of Biomedical Research Infrastructure:
Authorizes appropriations for grants to construct specialized
biosafety containment facilities where biological agents can
be handled safely without exposing researchers and the public
to danger. Also reauthorizes a successful NIH-industry
partnership challenge grants to promote joint ventures
between NIH and its grantees and for-profit biotechnology,
pharmaceutical and medical device industries with regard to
the development of countermeasures and research tools.
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