[Congressional Record Volume 148, Number 137 (Thursday, October 17, 2002)]
[Senate]
[Pages S10716-S10728]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LIEBERMAN (for himself and Mr. Hatch):
  S. 3148. A bill to provide incentives to increase research by private 
sector entities to develop antivirals, antibiotics and other drugs, 
vaccines, microbicides, and diagnostic technologies to prevent and 
treat illnesses associated with a biological, chemical, or radiological 
weapons attack; to the Committee on Finance.
  Mr. LIEBERMAN. Mr. President, America has a major flaw in its 
defenses against bioterrorism. Hearings I chaired in the Governmental 
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, chemical toxin, or radiological material. Correcting this 
critical gap is the purpose of legislation we are introducing today. 
This legislation is a refined and upgraded version of legislation I 
introduced last year (S. 1764, December 4, 2001) and I am delighted 
that Senator Hatch has joined me as the lead cosponsor of the new bill.
  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.
  In short, we need a diversified portfolio of medicines. In cases 
where we have ample advance warning of an attack and specific 
information about the agent, toxin, or material, 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, toxin, or material.
  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. We have very limited capacity to respond medically to a 
radiological attack. 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 we introduce today would provide incentives for 
private biotechnology companies to form capital to develop 
countermeasures--medicines--to prevent, treat and cure victims of 
bioterror, chemical and radiological 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 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. 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. These concerns are shared by pharmaceutical 
firms. 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 we have proposed are innovative and some may be 
controversial. We 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. We 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.


         relationship to bioterrorism preparedness legislation

  My proposal is complimentary to legislation on bioterrorism 
preparedness we enacted earlier this year. That law, Bioweapons 
Preparedness Act, focuses on many needed improvements in our public 
health infrastructure. These investments provide the infrastructure

[[Page S10717]]

where we could deploy the countermeasures that could be developed 
pursuant to the incentives proposed in my legislation.
  Among the provisions in the Frist-Kennedy law are initiatives 
regarding bioterrorism preparedness capacities, improvements in 
communications about bioterrorism, protection of children, protection 
of food safety, and global pathogen surveillance and response. We need 
to fully fund these new programs and capacities.
  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 law and my bill are complimentary. 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.


                       Cipro as a Countermeasure

  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.
  The point of this legislation is that we need many more Cipro-like 
and anthrax vaccine-like products. That we have these products is the 
good news; that we have so few others is the problem.


                     Biological Weapons Convention

  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 does so in good faith, the Convention's protective value is 
limited.
  On November 1 of 2001, the President announced his intent to 
strengthen the BWC as part of his comprehensive strategy for combating 
terrorism. A BWC review conference, held every five 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 
procedures for investigation 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.


                          CDC Quarantine Plans

  On November 26 of last year, 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 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

[[Page S10718]]

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 and 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.


                    the countermeasure research gap

  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 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 disease--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 two-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 vacinnia, 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 US 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 the Johns Hopkins Center for Civilians Biodefense Studies, it was 
projected that within two 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

[[Page S10719]]

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 
twenty-five 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 two 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 one 
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 antigovernmental 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 dimethly 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 toxin. 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 forty-seven laboratories 
and testing sites, employed nearly fifty thousand 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 antibiotic.
  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 one 
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. We do not believe it is necessary to describe the facts 
here. Our 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.


                 direct government funding of research

  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.
  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

[[Page S10720]]

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 pathogents. 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 products. This 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 
personnell, 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 $22.3 
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 enterpreneurial--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 countermeasure research.


                  industry research on countermeasures

  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 innovations 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.


                   incentives needed to spur research

  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. We 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.
  Some of the tax incentives in this legislation, and both of the two 
patent incentives I have proposed, may be controversial. In our 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 
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 we 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

[[Page S10721]]

of them have tax liability with respect to which to claim the credit. 
This explains why we 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.


        decision making on targets and registration of research

  The government determines which research is covered by the 
legislation and which companies qualify for the incentives for this 
research. No company is entitled to utilize the incentives until the 
government certifies its eligibility.
  These decisions are vested in the Secretary, Department of Homeland 
Security. In S. 1764, the decisions were vested in the White House 
Office of Homeland Security, but it is now likely that a Department 
will be created. I have strongly endorsed that concept and led the 
effort to enact the legislation forming the new Department.

  The legislation confers on the Secretary, 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 and incentives applies.
  The Secretary determines which agents and toxins present a threat and 
whether the countermeasures are ``more likely'' to be developed with 
the application of the incentives in the legislation. The Secretary 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. It may determine that the government itself should fund the 
research and development effort and not rely on private companies. The 
Department is required to consider the status of existing research, the 
availability of non-countermeasure markets for the research, and the 
most effective strategy for ensuring that the research goes forward. 
The legislation includes an illustrative, non-binding list of fifty-
four agents and toxins that might be included on the Secretary's list. 
The decisions of the Secretary are final and are not subject to 
judicial review.
  The Department then must provide information to potential 
manufacturers of these countermeasures in sufficient detail to permit 
them to conduct the research and determine when they have developed the 
needed countermeasure. It may exempt from publication such information 
as it deems to be sensitive.
  The Department also must specify the government market that will be 
available when a countermeasure is successfully developed, including 
the minimum number of dosages that will be purchased, the minimum price 
per dose, and the timing and number of years projected for such 
purchases. Authority is provided for the Department to make advance, 
partial, progress, milestone, or other payments to the manufacturers.
  The Department is responsible for determining when a manufacturer 
has, in fact, successfully developed the needed countermeasure. It must 
provide information in sufficient detail so that manufacturers and the 
government may determine when the manufacturer has successfully 
developed the countermeasure the government needs. If and when the 
manufacturer has successfully developed the countermeasure, it becomes 
entitled to the procurement, patent, and liability incentives in the 
legislation.
  Once the list of agents and toxins is set, companies may register 
with the Department 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 requirement gives the Department vital 
information about the research effort and the personnel involved with 
the research, authorizes inspections and other review of the research 
effort, and the filing of reports by the company.
  The Secretary then may certify that the company is eligible for the 
tax, purchase, patent, and liability incentives in the legislation. It 
bases this certification on the qualifications of the company to 
conduct the countermeasure research. 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, 
as determined by the Secretary.
  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.


                     diagnostics and research tools

  The registration and certification process applies to research to 
develop diagnostics and research tools, not just drugs and vaccines.
  Diagnostics are vital because healthcare professionals need to know 
which agent or toxin has been used in an attack. This enables them to 
determine which treatment strategy is likely to be most effective. We 
need quickly to determine which individuals have been exposed or 
infected, and to separate them from the ``worried well.'' it is likely 
in an attack that large numbers of individuals who have not been 
exposed or infected will flood into healthcare facilities seeking 
treatment. We need to be able to focus on those individuals who are at 
risk and reassure those who are not at risk.
  In terms of research tools, it is possible that we will face 
biological agents and chemical agents we have 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-
medicated 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 micoorganism--
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 incentives in the bill for this vital research.


                  Tax Incentives for Capital Formation

  The legislation includes four tax incentives to enable biotechnology 
and

[[Page S10722]]

pharmaceutical companies to form capital to fund research and 
development of countermeasures. Companies must irrevocably elect only 
one of the incentives with regard to the countermeasure research.
  Four different tax incentives are available so that companies have 
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 first option is for the company 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. This alternative is available only to companies with 
less than $750,000,000 in paid-in capital.
  The second option is for the company 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 three 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. 
This option also is available to small companies.
  The third and fourth options grant special tax credits to the company 
for the research. The first credit is for research conducted by the 
company and the other for research conducted at a teaching hospital or 
similar institution. Tax credits are available to any company, but they 
are only useful to a company with tax liability against which to claim 
the credit. Very few biotechnology companies receive revenue from 
product sales and therefore have no tax liability. Companies with 
revenue may be able to fund the research from retained earnings rather 
than secure funding from investors.
  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.
  The guaranteed purchase fund, and the patent protections, and 
liability provisions described below provide an additional incentive 
for investors and companies to fund the research.


                Government Countermeasure Purchase Fund

  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 Secretary 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 Secretary will determine whether 
the government will purchase more than one product per class. It might 
make 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.
  The purchase commitment for countermeasures is available to any 
company irrespective of its paid-in capital.


                   intellectual property protections

  Intellectual property protection of research is essential to 
biotechnology and pharmaceutical 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. The first 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 two years on the term of any patent held by that company. 
Companies must elect one of these two protections, but 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

[[Page S10723]]

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 the 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 
companies with less than $750,000,000 in paid-in capital. It provides 
that a company that successfully develops a countermeasure is entitled 
to a two-years 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 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.


                        limitation on liability

  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 required to indemnify and 
defend entities engaged in qualified countermeasure research through 
execution of ``indemnification and defense agreements.'' This 
protection is only available for countermeasures purchased under the 
legislation or to use of such countermeasures as recommended by the 
Surgeon General in the event of a public health emergency.
  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.


                       miscellanelous provisions

  The legislation contains a series of provisions designed to enhance 
countermeasure research.
  The legislation provides for accelerated approval by the FDA of 
countermeasures developed under the legislation. In most cases, the 
products would clearly qualify for accelerated approval, but the 
legislation ensures that they will be reviewed under this process.
  It provides a statutory basis for the FDA approving countermeasures 
where human clinical trials are not appropriate or ethical. Rules 
regarding such products have been promulgated by the FDA.
  It grants a limited antitrust exemption for certain cooperative 
research and development of countermeasures.
  It provides incentives for the construction of biologics 
manufacturing facilities and research to increase the efficiency of 
current biologics manufacturing facilities.
  It enhances the synergy between our for-profit and not for profit 
biomedical research entities. 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 upgrade 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

[[Page S10724]]

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 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.

  The legislation also sets incentives for the development of adjuvents 
to enhance the potency, and efficacy of antigens in responding to a 
biological agent.
  It requires the new Department to issue annual reports on the 
effectiveness of this legislation and these incentives, and directs it 
to host an international conference each year on countermeasure 
research.


                       calibration of incentives

  The 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.
  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 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 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 and development of treatments for cancer and 
autoimmune diseases. That is not the central purpose of this 
legislation, but it is also an additional rationale for it.


                               conclusion

  This 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. This Frist-
Kennedy law focuses effectively on direct Federal funding and 
coordination issues, but it does not include the sufficient incentives 
for the private sector to undertake this research on its own 
initiative. That law and my legislation 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 the legislation appear at 
this point in the Record.

Biological, Chemical and Radiological Weapons Countermeasures Research 
                              Act of 2002

       The legislation, a refined version of S. 1764 introduced on 
     December 4, 2001, proposes incentives that will enable 
     biotechnology and pharmaceutical companies to take the 
     initiative--for good business reasons--to conduct research to 
     develop countermeasures, including diagnostics, drugs, and 
     vaccines, to treat those who might be exposed to or infected 
     by biological, chemical or radiological agents and materials 
     in a terror attack.
       The premise of this legislation is that direct government 
     funding of this research is likely to be much more expensive 
     to the government and less likely to produce the 
     countermeasures we need to defend America. Shifting some of 
     the risk and expense of this research to entrepreneurial 
     private sector firms is likely to be less expensive to the 
     government and much more likely to produce the 
     countermeasures we need to protect ourselves in the event of 
     an attack.
       For biotechnology companies, incentives for capital 
     formation are needed because most such 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. 
     Special research credits for pharmaceutical companies are 
     also needed.
       For both biotech and pharmaceutical companies, there is no 
     established or predictable market for these countermeasures. 
     Investors and companies are justifiable reluctant to fund 
     this research, which will present technical challenges 
     similar in complexity to development of effective treatments 
     for AIDS. Investors and companies 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 companies 
     to form capital to conduct the research and tax credits 
     usable by larger companies with tax liability with respect to 
     which to claim the credits. It 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:
       (1) Setting Research Priorities (Section 101): The 
     Department of Homeland Security sets the countermeasure 
     research priorities in advance. It focuses the priorities on 
     threats for which countermeasures are needed, and with regard 
     to which the incentives make it ``more likely'' that the 
     private sector will conduct the research to develop 
     countermeasures. It is required to consider the status of 
     existing research, the availability of non-countermeasure 
     markets for the research, and the most effective strategy for 
     ensuring that the research goes forward. The Department then 
     provides information to potential manufacturers of these 
     countermeasures in sufficient detail to permit them to 
     conduct the research and determine when they have developed 
     the needed countermeasure. The Department is responsible for 
     determining when a manufacturer has, in fact, successfully 
     developed the needed countermeasure.
       (2) Registration of Companies (Section 102): Biotechnology 
     and pharmaceutical companies register with the Department to 
     become eligible for the incentives in the legislation. They 
     are obligated to provide reports to the Department as 
     requested and be open to inspections. The Department 
     certifies with companies are eligible for the incentives. 
     Once a company is certified as eligible for the incentives, 
     it becomes eligible for the tax incentives for capital 
     formation, and if it successfully develops a countermeasure 
     that meets the specifications of the Department, it becomes 
     eligible for the procurement, patent, and liability 
     provisions.
       (3) Diagnostics (Section 103): The incentives apply to 
     development of diagnostics, as well as drugs, vaccines and 
     other needed countermeasures.
       (4) Research tools (Section 104): A company is also 
     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

[[Page S10725]]

     or toxin not targeted by the Department for research.
       (5) Capital Formation for Countermeasure Research (Section 
     201): The legislation provides that a company seeking to fund 
     research is eligible to elect from among four tax incentives. 
     The companies are eligible to:
       (a) Establish an R&D Limited Partnership to conduct the 
     research. The partnership passes through all business 
     deductions and credits to the partners. Section 201 (b)(1).
       (b) 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. Section 201(b)(2).
       (c) Receive a special tax credit to help fund the research. 
     Section 201 (b)(3).
       (d) Receive a special tax credit for research conducted at 
     a non-profit and academic research institution. Section 201 
     (b)(4).
       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 (Section 218) 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.
       (6) Countermeasure Purchase Fund (Section 202): 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 price and in a pre-determined amount. The company 
     is given notice of the terms of the sale before it commences 
     the research.
       (7) Intellectual Property Incentives (Section 203): 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 million in paid-
     in capital, or, at the discretion of the Department of 
     Homeland Security, to any firm that successfully develops a 
     countermeasure.
       In addition, a company that successfully develops a 
     countermeasure is eligible for a 10 year period of market 
     exclusivity on the countermeasure.
       (8) Liability Protections (Section 204): The legislation 
     provides for protections against liability for the company 
     that successfully develops a countermeasure.
       (9) Accelerated Approval of Countermeasure (Section 211): 
     The countermeasures are considered for approval by the FDA on 
     a ``fast track'' basis.
       (10) Special Approval Standards (Section 212): The 
     countermeasures may be approved in the absence of human 
     clinical trails if such trails are impractical or unethical.
       (11) Limited Antitrust Exemption (Section 213): Companies 
     are granted a limited exemption from the antitrust laws as 
     they seek to expedite research on countermeasures.
       (12) Biologics Manufacturing Capacity and Efficiency 
     (Sections 214-215): Special incentives are incorporated to 
     ensure that manufacturing capacity is available for 
     countermeasures.
       (13) 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 (Section 216). 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 (Section 217).
       (14) Adjuvents (Section 219): The legislation provides 
     incentives for the development and use of adjuvents to 
     enhance the potency of countermeasures.
       (15) Annual Report (Section 220): The Department is 
     required to prepare for the Congress an annual report on the 
     implementation of these incentives.
       (16) International Conference (Section 221): The Department 
     is required to organize an annual international conference on 
     countermeasure research.

  Mr. HATCH. Mr. President, I rise today to cosponsor, with my 
colleague Senator Lieberman from Connecticut, Chairman of the 
Governmental Affairs Committee, legislation that we believe is 
essential to better prepare our nation to prepare for and respond to 
bioterrorist attacks. The goal of our bill, the Biological, Chemical 
and Radiological Measures Research Act of 2002, is to encourage private 
sector research and development of diagnostic products, drugs, and 
vaccines designed to counter biological, chemical, or radiological 
attacks.
  One year ago our country faced a series of anthrax attacks that 
exposed deficiencies in our nation's ability to respond to attacks of 
bioterrorism. We need to do more. This bill will help protect the 
American public by deterring future acts of bioterrorism and, in the 
event of another such attack, will increase our capacity to respond 
effectively to the weapon deployed.
  This legislation complements the bioterrorism bill passed by Congress 
earlier this year that focused on building up the public health 
infrastructure. Senators Kennedy, Gregg and Frist deserve much credit 
for their work on that bill as do Congressmen Tauzin, Bilirakis, 
Dingell and Brown. Also, we would be remiss if we did not recognize the 
manner in which the Appropriations Committees in both the Senate and 
the House adjusted their priorities so quickly last Fall. I salute the 
leadership of Senators Byrd, Harkin, Stevens and Specter in making 
available substantial new funding for building up the capacity of the 
public health system to protect our citizens against the threat of 
bioterrorism.
  When it comes to protecting America, partisanship has no place. 
Senator Lieberman built upon the strong tradition of bi-partisanship in 
the war against terrorism in introducing this bill today.
  Although we are far better prepared for a terrorist attack today than 
ever before, and preventing a terrorist attack is our first priority, 
there are areas where we can improve our preparedness in the case of 
such an attack. Chief among these is the development of preventive 
agents and treatments for those citizens who may become exposed to or 
infected by deadly biological, chemical, and radiological agents.
  Building up the public health infrastructure alone will be 
insufficient if our national medicine chest does not contain safe and 
effective medicines to counter particular threat agents. This bill 
creates incentives for the private sector to try to fill the medicine 
chest with new products designed to respond to biological or other 
similar attacks. We need many new treatments and vaccines and the 
Lieberman-Hatch bill will unleash the creative energy and many 
resources of the private sector biomedical research enterprise.
  America leads the world in biomedical research capacity. The 
Lieberman-Hatch bill attempts to help focus the enormous assets of our 
research expertise in a manner that will protect the public health. 
This legislation seeks to help translate the basic knowledge, much of 
it funded through the $27 billion taxpayer-investment in the National 
Institutes of Health, into tangible products developed by the private 
sector.
  Given the growing risk of further attacks and the potentially 
devastating consequences of bioterrorism, we must abandon a business as 
usual attitude and take the vigorous steps that Senator Lieberman and I 
urge through this legislation.
  Our legislation is an additional measure to other avenues we have 
pursued to protect our nation from terrorism, including the Biologic 
Weapons Convention and government funded research at NIH, the Defense 
Advanced Research Projects Agency, DARPA, and the Centers for Disease 
Control and Prevention, CDC.
  Though we have mobilized many governmental agencies and increased 
direct federal funding for research and development of new treatments, 
I agree with Senator Lieberman, that what we have done thus far, 
impressive as it has been, is not nearly enough. Direct government 
funding for this research is likely to be insufficient for our national 
defense needs unless we marry our efforts with the private sector to 
the greatest extent possible. That is exactly what this bill does.
  Unfortunately, it is hard to avoid sounding somewhat like an alarmist 
when speaking on these matters. But, the truth of the matter today is 
that we do not have effective treatment for a host of potential 
biological, chemical and radiological threat agents. We must develop 
these with a greater sense of urgency and this legislation will serve 
as a catalyst for private sector investment and research and 
development activities.

[[Page S10726]]

  We need to develop an expedient, efficient capacity that combines the 
best of what our society has--strong federal and academic institutions 
with the most innovative biotechnology and pharmaceutical companies in 
the world. It would be a grave mistake to ignore the tremendous 
capabilities and potential of our country's biotech and pharmaceutical 
private sector.

  We must be creative, willing to work together, putting aside partisan 
politics and our opinions of the government or the private sector when 
dealing with a potential deadly threat to our nation. I believe Senator 
Lieberman and I have done that. Though we have not agreed on all the 
details on everything related to homeland security, we agree on this 
vital component. We must provide the tools to forge a collaborative 
effort by the private sector and the Federal Government to come up with 
the cures and vaccines we may, sadly, need one day.
  The best deterrent of bioterrorist attacks is to be able to 
demonstrate the capacity to counter such dastardly acts. I think the 
case can be made that all the rapid progress we have made in smallpox 
in the last year makes an attack with that agent less likely. That is 
the good news. The bad news is that there are too many agents for which 
we do not have any vaccine or effective therapeutic response. We need 
to roll up our sleeves and get to work on many other potential tools of 
destruction. Our bill provides the private sector with important 
incentives to get this work done and to get it done now.
  Most private sector companies rely on equity capital markets and 
investments to fund research. Naturally, they focus on research that 
will lead to products that will sell and have a dependable market. As 
we know, thankfully, there is no dependable or established market for 
counter terrorism. Therefore, not unreasonably, investors need some 
kind of assurance that the costly and complex research we are asking 
them to invest in will be rewarded--that the reward will be 
commensurate with the risk.
  Under current law, private companies are reluctant to enter into 
agreements with government agencies to conduct needed research. The 
bill Senator Lieberman and I are introducing greatly expands the 
incentives for biotechnology and pharmaceutical companies to develop 
bioterrorism countermeasures. I do not think anyone will oppose 
involving some of the most powerful research minds and new technology 
as we defend our country against these threats. We need to involve 
these biomedical research companies more directly into our national 
defense plan, as they may very well be the ones to provide us with what 
we need to the medical front.
  I know there are novel, and perhaps controversial, features in this 
bill--anything innovative usually does. I ask that each and every one 
of you who has a stake in this issue enter into this debate. Keep in 
mind that the goal is to close any gap that exists in our plan against 
terrorism--I believe this includes engaging the private sector. We need 
to make sure that these companies have the proper incentives to engage 
in expensive, arduous research that could potentially save millions of 
Americans.
  Let me now review the specifics of our proposal. We provide 
incentives, such as tax incentives, guaranteed purchase funds, and 
patent and liability protections, which make it possible for private 
companies to form the capital needed to conduct this vital research. 
Again, we cannot expect these companies to engage in expensive research 
and development for an extremely unpredictable market without providing 
them meaningful incentives and reassurance.
  In some respects this legislation is similar to another bill I co-
authored, the Orphan Drug Act. The Orphan Drug Act utilizes tax credits 
and marketing exclusivity incentives to spur research into rare 
diseases with patient populations under 200,000 in the United States. 
This modest little bill has resulted in over 220 approved orphan 
products with over 1000 more designated for investigation. It is my 
hope and expectation that, in introducing our bill today, we can 
recreate the success of the Orphan Drug Act in getting the private 
sector motivated in a particular area of research.
  The Lieberman-Hatch bill contains powerful incentives. Here is how it 
works. The bill requires the private sector to work closely with the 
appropriate governmental officials. The legislation ensures that the 
Department of Homeland Security sets the countermeasure research 
priorities in advance. The Department of Homeland Security is required 
to take into account the status of existing research, the potential for 
non-countermeasure markets for the research, and the most effective 
strategy for propelling the research forward and provides this 
information to potential manufacturers. The bill also requires 
companies to register with the Department, to provide reports as 
requested and to be open to inspections, in order to be eligible for 
incentives. Once a company is certified, it is eligible for tax 
incentives for capital formation.
  The Department then determines if a manufacturer has successfully 
developed a countermeasure. Once the specifications of the Department 
are met, the company is eligible for the procurement, patent, and 
liability provisions. These incentives apply to diagnostics, drugs, 
vaccines and other countermeasures deemed necessary, including research 
tools.
  If companies seek to develop a research tool that enables the 
advancement of a countermeasure to a previously unknown agent or toxin, 
or an agent or toxin not targeted by the Department, they are also 
eligible for incentives.

  The four tax incentives companies are eligible to select from 
include:
  (a) An R&D Limited Partnership to conduct the research. The 
partnership passes through all business deductions and credits to the 
partners.
  (b) 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.
  (c) A special tax credit to help fund the research.
  (d) A special tax credit for research conducted at a non-profit and 
academic research institution.

  I want to point out that a company can elect only one of these 
incentives and, if it elects one of these incentives, the company is 
not eligible to further benefits under the Orphan Drug Act. That is 
only fair.
  I would like to briefly discuss the Countermeasure Purchase Fund 
contained in Section 202 of the bill. Basically, the legislation 
affords a company that successfully develops a countermeasure--through 
FDA approval--eligibility to sell the product to the Federal Government 
at a pre-established price and in a pre-determined amount. The company 
is given notice of the terms of the sale before it begins research.
  The intellectual property incentives are contained in Section 203 of 
the bill. There are two patent incentives:
  One, the company is eligible to receive full patent term restoration 
for its invention. This means that it is held harmless for patent term 
erosion due to the lengthy FDA approval process. This alternative is 
available to any company that successfully develops a countermeasure 
irrespective of its paid-in capital. This is a significant incentive 
over the normal partial patent term restoration provisions contained in 
the Drug Price Competition and Patent Term Restoration Act. I am a co-
author of this law which has contributed to consumer savings of $8 to 
$10 billion each year since its passage in 1984. This was the 
legislation that created the modern generic drug industry. But under 
this law the patent term cannot be restored beyond 14 years. When the 
1984 law was enacted the patent term was 17 years from date of patent 
issuance; with the enactment of the GATT Treaty implementing 
legislation, the patent term was changed to 20 years from date of 
application. By adopting a policy of day for day patent term 
restoration, the Lieberman-Hatch bill is sending a strong signal to the 
private sector to pour its resources into this research. By lengthening 
the patent term beyond the existing 14 year cap, drug companies will 
have a new incentive to devote their efforts to this research.
  Two, under the bill, small companies are also eligible to elect 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

[[Page S10727]]

for small biotechnology companies with less than $750 million in paid-
in capital, or, at the discretion of the Department of Homeland 
Security, to any firm that successfully develops a countermeasure. This 
provision will get the attention of our nation's growing biotechnology 
sector.
  In addition, a company that successfully develops a countermeasure is 
eligible for a 10 year period of market exclusivity on the 
countermeasure. This means that the FDA may not approve a generic copy 
of such a drug for 10 years regardless of whether the drug has any 
patent protection. This is in contrast to the 5 years of marketing 
exclusivity granted under the Drug Price Competition and Patent Term 
Restoration Act. This is an important incentive because it is the 
government that enforces the marketing exclusivity provision, not the 
firm through costly, risky, and time-consuming private patent 
infringement litigation.
  Other incentives in the bill include the liability protections set 
forth in section 204; a limited antitrust exemption designed to 
expedite and coordinate research as set forth in section 213; 
accelerated FDA approval provisions described in section 211; and, 
special FDA approval standards established in section 212 that codify 
the FDA regulations that authorize approval in the absence of human 
clinical trails if such trails are impractical or unethical.
  In addition the bill provide; incentives to enhance biologics 
manufacturing capacity for countermeasures. This includes grants to 
construct specialized biosafety containment facilities where biological 
agents can be handled safely without exposing researchers and the 
public to danger. The bill 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.
  Finally, the bill also provides incentives for the development and 
use of adjuvants to enhance the potency of countermeasures; requires 
the Department of Homeland Security to prepare an Annual Report to 
Congress on the implementation of these incentives in the legislation 
and to organize an annual international conference on countermeasure 
research.
  Let me conclude by saying that this legislation lays out an 
unabashedly aggressive set of incentives designed to stimulate 
research. There will undoubtedly be criticisms of some of the features 
of the bill. Senator Lieberman and I recognize that adjustments will 
have to be made along the way. We want to work closely with President 
Bush, Vice President Cheney, Governor Ridge, and Secretary Thompson and 
others in the Administration in refining this legislation. We recognize 
that unless the President feel that this type of program is necessary 
it is unlikely to be adopted.
  The subject mater of this legislation cuts across many Committees of 
the Senate. Senator Lieberman and I will work with the Finance 
Committee, the Judiciary Committee I serve on both of these 
committees--as well as the HELP Committee, Commerce Committee, and the 
Governmental Affairs Committee which my friend from Connecticut Chairs. 
I might add, as much as I admire Senator Lieberman, I hope that next 
month he becomes the Ranking Democratic Member of the Governmental 
Affairs Committee.
  We will continue to work with all interested parties in the private 
sector to refine this legislation. We welcome this dialog.
  Let me state clearly that my cosponsorship today is more an 
unambiguous statement that I intend to work in partnership with Senator 
Lieberman than it is a statement that I agree with each provision and 
detail of this bill. Specifically, I do not agree with--and would not 
support--the anti-trust and indemnification provisions as currently 
drafted. We must tread carefully in the areas of government 
indemnification and in holding any meetings with the private sector in 
which anti-trust concerns are triggered.
  My cosponsorship of this legislation today which will serve as a 
discussion draft between the 107th and 108th Congress--should not be 
considered as a reversal of my views on indemnification and antitrust 
policy. It is not. My cosponsorship only signals my willingness to be 
open to rethinking my traditional views of indemnification and 
antitrust policy in light of this grave threat to our national 
security. These sections--as well as many other parts of the bill need 
more work. At the end of the day, I hope we can come together on these 
questions.
  I want to stress the fact that I opposed proposed indemnification 
language in the Kennedy-Gregg-Frist bioterrorism bill passed earlier 
this year. I have opposed indemnification provisions in discussions 
over matters of homeland security. I continue to hold my position that 
indemnification is not only not the best policy but that it may also be 
counterproductive in the long run.
  Similarly, I have rejected any general policy of governmental 
indemnification of those injured by asbestos or tobacco use. The 
private sector must bare its share of the risk and responsibility when 
it produces potentially dangerous products.
  Frankly, I believe the solution to the indemnification issue may 
ultimately stem from the hard work of Senators Warner and Thompson with 
respect to their amendment, Number 4530, to the Homeland Security bill. 
This language was carefully worked out in close consultation with by 
Senators Warner and Thompson and the White House earlier this year. We 
will take advantage of amendment Number 4530 as we further refine our 
legislation in this area.
  The Warner-Thompson language builds upon the principles contained in 
Executive order No. 10879 and the authority set forth in Public Law 85-
804. These authorities grant the Department of Defense, at DoD's 
discretion, to include indemnification clauses in its contracts with 
military contractors, with certain limitations and conditions. In order 
for this authority to apply to the new Office of Homeland Security, 
current law needs to be amended.
  It is important to note that the language of the Warner-Thompson 
amendment retains the principle of discretionary authority. That is 
important. We can not write a blank check to the private sector. 
Senator Lieberman and I have included language in our bill that 
requires the new Secretary of Homeland Security ``to make a 
determination . . . that it is in the national security interest of the 
United States'' before any indemnification provision could be 
triggered. The Warner-Thompson amendment is narrowly tailored to the 
procurement of anti-terrorism technology or services by a federal 
agency directly engaged in homeland security activities. Moreover, 
consistent with the Warner-Thompson language, we need to flesh out the 
factors the Administration shall consider in negotiating the extent of 
any indemnification.
  Although we need to further refine the language in the discussion 
draft bill we introduce today, my intent is do follow the lead of and 
principles contained in the Warner-Thompson Amendment. Further, the 
Warner-Thompson Amendment language includes procurements made by State 
and local governments but only through contracts made by the head of an 
agency of the Federal Government and only to the extent that those 
loses are not covered by insurance.
  A discussion of indemnification in the context of bioterrorism 
countermeasures is a very special case. It is a unique circumstance in 
which we may very well face many issues never confronted before such as 
the possibility of using drugs that can not be ethically tested in 
human beings due to the danger of the agent the drug is intended to 
treat. We are not talking about asbestos or tobacco here, we are 
talking about potential attacks that could undermine the public health, 
economic wealth, and environmental integrity of the United States of 
America.
  We are trying to protect against the use weapons of terror in the 
hands of terrorists, not routine uses of consumer and other products. 
If unforseen side effects occur when countermeasures are dispensed, 
society may be presented with problems that will require innovative 
responses. The future of our country is at stake. I have twenty 
grandchildren and I want them to hand down our traditions and heritage 
to their grandchildren. It is for their

[[Page S10728]]

sake that we must try to settle these issues.
  But let us not get to far ahead of ourselves at this point with all 
these details. This legislation is a work in progress. Anyone who has 
witnessed the extensive floor debate over the last 2 months over the 
creation of the Office of Homeland Security understands that we have 
much, much more work to do with respect to the creation of the new 
department and many other homeland security issues. I hope and expect 
that President Bush and the Congress will come together on the 
Department of Homeland Security. I commend Senator Lieberman for his 
constructive role in this ongoing debate.
  My support of this legislation should be construed as a personal 
commitment to work closely with Senator Lieberman, the White House and 
other parties to address the issues raised in the bill. It is my hope 
that we can arrive at an acceptable compromise on the indemnification 
and antitrust provisions, as well as, all the other matters taken up in 
this important legislation.
  As a pragmatic legislator, I understand that to make an omelette, you 
always have to break an egg. I hope this discussion draft bill will 
help inspire discussion and move the process along.
  We are facing unprecedented threats to our Nation's security. We need 
to be open to novel solutions to these new problems. We hope that this 
bill will foster thoughtful discussion on how best to prepare the 
nation for any potential biological, chemical, or radiological attack.
  Let us not lose sight of our mission to protect our nation from the 
devastating illness and death that bioterrorism can bring. We 
desperately need to develop the technology to prevent, detect, 
diagnose, and treat our citizens who may fall victim to bioterrorism. I 
believe that strengthening the government's partnership with the 
private sector is the most effective and expedient step we can take at 
this point in time. The Kennedy-Gregg-Frist bioterrorism law was an 
enormous step forward. The funding support provided by Senators Byrd, 
Stevens, Harkin, and Specter and other appropriators is also essential. 
This public sector investment must now be joined by legislation that 
will foster a commensurate private sector response. That is exactly 
what the Lieberman-Hatch bill, the Biological, Chemical and 
Radiological Measures Research Act of 2002, will do if Congress passes 
this law.
  Let me close by saying that I have enjoyed working with Senator 
Lieberman in developing this bill and look forward to continuing this 
partnership in the future as we work with other Senators on this 
legislation. I also want to recognize the efforts of Chuck Ludlam on 
Senator Lieberman's staff for all the work he has done to bring the 
bill to this point. Senator Lieberman and I urge our colleagues to 
review the ``Biological, Chemical and Radiological Measures Research 
Act of 2002''. I hope that our colleagues will conclude that this 
legislation deserves to be near the top of the agenda when the 108th 
Congress convenes in January.
                                 ______