[Congressional Record Volume 149, Number 103 (Monday, July 14, 2003)]
[Extensions of Remarks]
[Pages E1472-E1475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     PROJECT BIOSHIELD ACT OF 2003

                                 ______
                                 

                          HON. CHRISTOPHER COX

                             of california

                    in the house of representatives

                         Monday, July 14, 2003

  Mr. COX. Mr. Speaker, I hereby submit for inclusion in the Record the 
cost estimate from the Congressional Budget Office for H.R. 2122, the 
Project BioShield Act of 2003, reflecting that implementing H.R. 2122 
would increase discretionary spending by $0.3 billion in 2004. The 
Public Printer estimates that the cost of including the CBO estimate in 
the Record is $975. Because this estimate dated July 9, 2003, was not 
received by the Committee in time for inclusion in the Committee Report 
on the legislation.

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                     Washington, DC, July 9, 2003.
     Hon. Christopher Cox,
     Chairman, Select Committee on Homeland Security, House of 
         Representatives, Washington, DC.
       Dear Chairman: The Congressional Budget Office has prepared 
     the enclosed cost estimate for H.R. 2122, the Project 
     BioShield Act of 2003.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are Jeanne De 
     Sa, who can be reached at 226-9010, and Sam Papenfuss, who 
     can be reached at 226-2840.
           Sincerely,
                                              Douglas Holtz-Eakin,
                                                         Director.
       Enclosure.

        Congressional Budget Office Cost Estimate, July 9, 2003

 (H.R. 2122: Project BioShield Act of 2003--As ordered reported by the 
        Select Committee on Homeland Security on June 26, 2003)


                                SUMMARY

       H.R. 2122 would amend the Public Health Service Act (PHSA) 
     to authorize appropriations of up to $5.6 billion for fiscal 
     years 2004 through 2013 for procurement of certain security 
     countermeasures (drugs, devices, and biological products to 
     treat, identify, and prevent the public health consequences 
     of terrorism). Of that amount, $890 million could be 
     obligated in fiscal year 2004 and up to $3.4 billion could be 
     obligated during fiscal years 2004 through 2008. Funding to 
     buy these security countermeasures would be provided to the 
     Department of Homeland Security (DHS), but the Department of 
     Health and Human Services (HHS) would be responsible for 
     procuring and stockpiling the countermeasures.
       In addition, H.R. 2122 would authorize the appropriation of 
     $5 million in 2004 and such sums as may be necessary for 2005 
     and 2006 for DHS to hire analysts to assess biological, 
     chemical, nuclear, and radiological threats. The bill also 
     would authorize appropriations of such sums as may be 
     necessary for fiscal years 2003 through 2006 for DHS to 
     acquire and deploy secure facilities to receive classified 
     information and products.
       Assuming appropriation of the authorized amounts and 
     including administrative costs, CBO estimates that 
     implementing H.R. 2122 would increase discretionary spending 
     by $0.3 billion in 2004, $3.2 billion for fiscal years 2004 
     through 2008, and $5.7 billion over the 2004-2013 period. In 
     addition, H.R. 2122 would relax certain requirements for 
     federal agencies related to the development and approval of 
     countermeasures. The bill would provide HHS with increased 
     authority and flexibility to award contracts and grants for 
     research and development of qualified countermeasures, hire 
     technical experts, and procure items necessary for research. 
     Those provisions might result in higher discretionary 
     spending, but CBO does not have sufficient information to 
     estimate their budgetary effect.
       The bill also would authorize the Food and Drug 
     Administration (FDA) to approve the use of certain security 
     countermeasures during emergencies designated by the 
     Secretary of HHS. CBO estimates this provision would have no 
     budgetary effect.
       H.R. 2122 contains no intergovernmental or private-sector 
     mandates as defined in the Unfunded Mandates Reform Act 
     (UMRA) and would impose no costs on state, local, or tribal 
     governments.


                ESTMATED COST TO THE FEDERAL GOVERNMENT

       The estimated budgetary impact of H.R. 2122 is shown in the 
     following table. The costs of this legislation fall within 
     budget function 550 (health).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     By fiscal year, in millions of dollars
                                                      --------------------------------------------------------------------------------------------------
                                                         2003     2004     2005     2006     2007     2008     2009     2010    2011-     2012     2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           -CHANGES IN DISCRETIONARY SPENDING
 
---Project BioShield:--------
    Estimated Authorization Level                      .......      890    2,528        -  .......    2,175        -        -  .......  .......  .......
    Estimated Outlays                                  .......      270      680      870      770      510      440      560      650      490      250
Personnel:-
    Estimated Authorization Level                      .......        5        5        5  .......  .......  .......  .......  .......  .......  .......
    Estimated Outlays                                  .......        5        5        5  .......  .......  .......  .......  .......  .......  .......
Infrastructure:
    Estimated Authorization Level                           20       20       20       20  .......  .......  .......  .......  .......  .......  .......
    Estimated Outlays-                                 .......       10       16      18-       18       12        4        2  .......  .......  .......
Administrative Costs:--------
    Estimated Authorization Level                      .......       9-        9        9        9       10       10       10       10       11       11
    Estimated Outlays                                  .......        7        8        9        9       10       10       10       10       11       11
        Total:--------
    Estimated Authorization Level                           20      924    2,562      34-        9       10    2,185      10-       10       11       11
    Estimated Outlays                                        -      292      709      902      797      532      454      572      660     501-      261
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page E1473]]

                           BASIS OF ESTIMATE

       CBO assumes that this bill will be enacted before the end 
     of fiscal year 2003.
     Procurement of Security Countermeasures: Project BioShield
       Under current law, MS administers the Strategic National 
     Stockpile (SNS), which contains drugs, diagnostic devices, 
     vaccines, and other biological products to combat the public 
     health consequences of a terrorist attack or other public 
     health emergencies. DHS currently provides the financing for 
     those efforts, which include the procurement of a new 
     smallpox vaccine and stockpiling of that vaccine and older 
     versions of the vaccine. Authorization for those programs was 
     established in the Public Health Security and Bioterrorism 
     Preparedness Response Act of 2002 (Public Law 107-88). That 
     act authorized appropriations of $640 million in 2002 and 
     such sums as may be necessary for fiscal years 2003 through 
     2006 for the SNS and $509 million in 2002 and such sums as 
     may be necessary for fiscal years 2003 through 2006 for the 
     development of the smallpox vaccine. About $400 million was 
     appropriated in 2003 for those activities.
       H.R. 2122 would modify the existing authorizations for the 
     SNS and for the development of the smallpox vaccine by 
     codifying the provision in the PHSA instead of in Public Law 
     107-88. CBO estimates that this modification would have no 
     budgetary effect.
       H.R. 2122 also would authorize DHS to augment the SNS with 
     certain additional products. That effort, called Project 
     BioShield, would allow the federal government to enter into 
     contracts to procure security countermeasures, which are 
     defined in the bill as drugs, devices, biological products, 
     vaccines, vaccine adjuvants, antivirals, or diagnostic tests 
     used to treat, identify, or prevent harm from biological, 
     chemical, nuclear, or radiological agents that the Secretary 
     determines are a material threat. Such drugs, devices, or 
     biological products would have to be licensed or approved by 
     the FDA, or otherwise determined by the Secretary of HHS to 
     have the potential to be licensed or approved by the FDA. The 
     federal government also could acquire products used to treat 
     the adverse effects of drugs or biologic products used as 
     security countermeasures.
       The rate at which the funding authorized by the bill would 
     be appropriated and spent would depend upon many factors, 
     including the nature of advances in biotechnology, the degree 
     of industry interest and capacity, the threat environment, 
     and government priorities. Assuming appropriation of the 
     authorized amounts, current and future Administrations would 
     have the discretion to enter into multiple contracts for the 
     manufacture of security countermeasures or to cease 
     contracting altogether for a period of years.
       To estimate spending under H.R. 2122, CBO consulted with 
     Administration officials about activities they are planning 
     or would consider if Project BioShield were enacted. 
     Officials described plans to acquire and maintain stockpiles 
     of seven security countermeasures to combat five biological 
     agents. The Administration estimates that the cost of 
     procuring, storing, and replacing those countermeasures would 
     be about $5.6 billion over the 2004-2013 period if there were 
     no constraints on funding.
       Those currently planned acquisitions do not include any 
     countermeasures for chemical, radiological, or nuclear 
     agents, and they address only a subset of the threats for 
     which research and development activities on countermeasures 
     is being conducted or funded by HHS, the Department of 
     Defense (DOD), and the private sector. Based on information 
     provided by government officials and in consultation with 
     outside experts, CBO has concluded that it is likely that 
     drugs, devices, or biological products addressing some of 
     those other threats will be developed in the coming decade 
     and that some of those countermeasures would be stockpiled 
     under Project BioShield if funds were appropriated for that 
     purpose. CBO's estimate does not assume that any specific 
     product would be developed and procured at any specific time. 
     It does, however, account for a range of possibilities that 
     would be available to the government if the authorized funds 
     are appropriated.
       Authorities and Requirements Under H.R. 2122. H.R. 2122 
     would authorize appropriations of up to $5.6 billion for 
     fiscal years 2004 through 2013 for the federal government to 
     enter into contracts to procure security countermeasures. Of 
     that amount, $890 million could be obligated in fiscal year 
     2004 and up to $3.4 billion could be obligated during fiscal 
     years 2004 through 2008.
       Decisions regarding what types of security countermeasures 
     to procure would be made by the President after reviewing 
     recommendations of the Secretaries of DHS and HHS. Subject to 
     Presidential approval and a determination that inclusion of 
     certain countermeasures in the stockpile is appropriate, the 
     Secretaries of DHS and HHS would seek potential vendors to 
     produce the countermeasures and enter into contracts to buy 
     the countermeasures from those vendors. In making that 
     determination, the Secretary would determine and consider 
     several factors, including the quantity of the product 
     necessary for the stockpile, the feasibility of obtaining 
     sufficient quantities of the product within five years, and 
     whether there is a significant commercial market for the 
     product other than as a security countermeasure. Those 
     factors would not be requirements for procurement, but 
     considerations in determining the appropriateness for 
     inclusion of the countermeasure in the stockpile.
       The Secretary of HHS would be responsible for arranging the 
     procurement, including negotiating the quantity, price, and 
     production schedule in five-year contracts or cooperative 
     agreements, though eight-year contracts would be permitted 
     for first awards. Payment would be conditioned on the 
     delivery of a substantial portion of promised units. 
     However, the Secretary could provide an advance payment of 
     not to exceed 10 percent of the contract if the Secretary 
     determines such payment is necessary to the project's 
     success. The Secretary could pay vendors for storage, 
     shipping, and handling and would be permitted to use 
     noncompetitive procedures if the product is available only 
     from a limited number of sources. Additional 
     countermeasures for the same threat also could be 
     procured, if they were to provide improved safety or 
     effectiveness or otherwise enhance public health 
     preparedness.
       The authorized funds could not be used for the purchase of 
     vaccines under contracts entered into prior to enactment, or 
     for administrative costs. Based on information from 
     Administration officials, CBO expects that funding would not 
     be available specifically for research and development, 
     although the price for the completed products would probably 
     cover some development costs.
       In addition, H.R. 2122 would allow HHS to produce the 
     vaccines and other countermeasures if HHS and DHS determined 
     that the government could produce the countermeasure more 
     cheaply or more quickly than through the normal procurement 
     process. This authority would not allow the government to 
     spend more money than is authorized and appropriated for this 
     purpose.
       The Administration's Plans to Implement Project BioShield. 
     Based on existing science and a current assessment of 
     potential threats to public health, the Administration has 
     identified several agents for which countermeasures are 
     needed to protect the public health and could be included in 
     Project BioShield. Those agents are smallpox, anthrax, 
     botulinum toxin, plague, and Ebola. The Administration 
     estimates that spending for countermeasures under Project 
     BioShield, including purchase, storage, and replacement 
     costs, would total about $5.6 billion over the 2004-2013 
     period, assuming the successful development of those 
     countermeasures and no constraints on funding. More than half 
     of those costs would be for the improved smallpox and anthrax 
     vaccines. A brief description follows of the security 
     countermeasures the Administration plans to acquire and 
     stockpile.
       Smallpox. Under Project BioShield, the Administration plans 
     to procure a next-generation version of the smallpox vaccine 
     called modified vaccinia Ankara (MVA). This new vaccine is an 
     attenuated version of the existing vaccine and may be used to 
     safely vaccinate about 30 million individuals with 
     compromised immune systems, eczema, or certain other high-
     risk conditions. Under the authority provided for Project 
     BioShield, HHS plans to purchase 60 million doses of the new 
     vaccine at about $15 per dose over a three-year period for a 
     cost of about $900 million. The Administration expects to be 
     able to enter into contracts and begin acquiring the vaccine 
     in 2004. Additional costs for inventory management and 
     replacement of expired stocks over the 2007-2013 period would 
     likely add another $1 billion, according to Administration 
     estimates, but could be lower if long-term refrigerated 
     storage proves to be effective.
       Anthrax. The Administration also expects to purchase about 
     60 million doses of a next-generation anthrax vaccine, called 
     a recombinant protective antigen (rPA) vaccine, under Project 
     BioShield. The rPA vaccine would require fewer doses per 
     person than the current vaccine, and potentially could be 
     effective for people who have already been exposed to 
     anthrax, giving the government the ability to vaccinate about 
     20 million people. The Administration anticipates beginning 
     the procurement process in the next few years and spending 
     about $700 million on the vaccine over a three-year period. 
     Because the rPA anthrax vaccine has an expected shelf life of 
     five to six years, additional costs would be incurred for 
     inventory management and replacement. The Administration 
     estimates that costs for the rPA vaccine could total $1.4 
     billion over the 2004-2013 period.
       Botulinum Toxin. Under current law, HHS has stockpiled some 
     antitoxins to treat botulism, a paralytic and often fatal 
     illness caused by a nerve toxin produced by the botulinum 
     bacteria. However, those antitoxins are no longer 
     manufactured, and the manufacturing process, which requires 
     horse serum, is complicated and time intensive. After 
     identifying a manufacturer, the Administration plans to spend 
     about $800 million acquiring newly produced antitoxin at a 
     cost of about $2,000 per dose as part of Project BioShield. 
     Acquisition would be spread over a three-year period, 
     beginning in the next few years. This antitoxin would require 
     specialized storage and refrigeration.
       In addition, the Administration has indicated that it would 
     like to purchase both a vaccine that would protect against 
     botulism and monoclonal antibodies to neutralize the effects 
     of the toxin. (Monoclonal antibodies are engineered proteins 
     that can neutralize and destroy certain pathogens and 
     toxins.) The Administration anticipates buying vaccine and 
     monoclonal antibodies by 2007 or 2008, at a cost of about 
     $140 million for 750,000 doses of the vaccine and $750 
     million for monoclonal antibodies. The Administration 
     estimates that spending for botulinum countermeasures, 
     including the cost of storage

[[Page E1474]]

     and inventory management, would total $1.8 billion over the 
     2004-2013 period.
       Plague. Plague is an infectious disease caused by a 
     bacterium. Plague has several forms--pneumonic, bubonic, and 
     septicemic--and can be treated by existing antibiotics. A 
     vaccine for the plague is currently in the research and 
     development phase, with the expectation that a product 
     potentially could reach the advanced development phase next 
     year. Beginning in 2005, the Administration expects to 
     procure about 2 million doses (enough to treat people in 
     areas surrounding any outbreak) at an estimated cost of about 
     $40 per dose--for a total cost of about $80 million. With 
     additional costs related to the acquisition of the vaccine, 
     the Administration estimates spending on plague 
     countermeasures would total about $220 million over the 2004-
     2013 period.
       Ebola. There is no current treatment for Bbola, one of 
     several viral hemorrhagic fevers, but the National Institutes 
     of Health (NIH) is conducting research on a vaccine that the 
     Administration would be interested in purchasing when it 
     reaches an advanced development stage. Under current plans, 
     the Administration intends to purchase enough vaccine for 
     3 million individuals to prevent the spread of an 
     outbreak. Because this vaccine is still in the research 
     and development phase, when the vaccine would become 
     available and the potential cost per dose are unclear. The 
     Administration assumes the vaccine will become available 
     in 2005, and estimates the price to be about $30 per dose, 
     for a total acquisition cost of $90 million. Combined with 
     other costs related to the Ebola vaccine, including 
     storage and replacement, the Administration anticipates 
     spending would total about $260 million over the 2004-2013 
     period for this aspect of Project BioShield.
       CBO's Estimate of the Potential Cost of Project BioShield. 
     CBO has estimated both the cost of implementing the 
     Administration's plan and the potential cost of acquiring 
     other products not encompassed by that plan.
       CBO's Estimate of the Administration's Plan. Without any 
     funding constraints, CBO expects that the Administration's 
     plans for MVA smallpox vaccine, the anthrax rPA vaccine, and 
     the botulism antitoxins would likely take shape as described, 
     albeit more slowly than the Administration estimates. CBO 
     estimates that spending for vaccines and monoclonal 
     antibodies for botulism and vaccines for plague and Ebola 
     would likely be lower than the Administration estimates, even 
     without funding constraints. CBO's lower estimate reflects 
     the possibility that development of those vaccines and 
     monoclonal antibodies might not succeed as quickly as the 
     Administration's estimate assumes. It also reflects the 
     possibility that Project BioShield would spend less on some 
     of the botulism countermeasures if all three countermeasures 
     (vaccine, antitoxins, and monoclonal antibodies) became 
     available.
       CBO estimates that about $5.2 billion would be required to 
     procure products identified by the Administration over the 
     2004-2013 period.
       Estimated Spending for Products Not Listed in the 
     Administration's Plan. Under the bill, other countermeasures 
     not in the Administration's plan could be purchased with 
     appropriations provided through Project BioShield. 
     Consequently, the specific security countermeasures that 
     would be acquired under H.R. 2122 are likely to evolve over 
     time as the result of many factors, including scientific 
     advances, the interest and cooperation of biotech and other 
     manufacturing companies, the emergence of new threats, and 
     changes in this and future Administrations' assessments of 
     which potential countermeasures should be a priority. 
     Barriers to technological advance such as restricted 
     laboratory space or shortage of primates for testing could 
     slow development of countermeasures for certain agents. At 
     the same time, rapid advances in products currently in the 
     early-stage research and development could present the 
     government with unforseen countermeasure options. Acquisition 
     of countermeasures also would be affected by whether this and 
     future Administrations decide to procure products that 
     require more than five years to be licensed or have a 
     significant commercial market.
       Acquisitions under the bill might include additional 
     countermeasures for agents addressed by the Administration's 
     plan. For instance, potential emerging treatments include the 
     use of monoclonal antibodies. This technology has had initial 
     application in the treatment of cancer, and possibly could be 
     applied to anthrax, the plague, or viral hemorrhagic fevers 
     in the coming years. Other potential countermeasures include 
     new antiviral drugs to treat smallpox and viral hemorrhagic 
     fevers (both biodefense research priorities for NIH) and a 
     narrow-spectrum antibiotic for anthrax.
       In addition, CBO's research indicates there are numerous 
     other biological agents for which countermeasures ultimately 
     could be purchased under Project BioShield. HHS has 
     established three classes of biological agents that pose 
     significant risks to national security and the public health. 
     Category A agents pose the greatest risk due to their ease of 
     transmission, mortality rates, and overall risk to the 
     public. All of the agents included in the Administration's 
     plan are considered Category A agents, but that initial plan 
     does not address such Category A agents as tularemia, a 
     bacterial infection affecting the respiratory system, and 
     viral hemorrhagic fevers other than Ebola. Vaccines for both 
     of those agents are biodefense research priorities of NIH. 
     Further, the government might seek countermeasures for some 
     Category B and C agents, including toxins such as ricin, 
     certain bacteria such as brucellosis, and several forms of 
     viral encephalitis.
       Also, under the authority provided by the bill, the 
     government could procure countermeasures against chemical 
     agents (nerve, blister, blood, and pulmonary agents) and 
     radiological and nuclear agents. The Administration currently 
     does not plan to use the bill's authority to purchase agents 
     that could mitigate threats from these sources, but it could 
     do so if the perceived threat from these agents changed or if 
     certain treatments became scientifically feasible. 
     Countermeasures that could be acquired under Project 
     BioShield include existing treatments for many nerve gases 
     (including VX, Sarin, and Soman gas), Prussian Blue (a 
     treatment for certain types of radiation poisoning), and 
     hydroxycobalamin (a treatment for cyanide poisoning that is 
     in an advanced stage of development).
       Finally, under H.R. 2122, Project BioShield would be able 
     to purchase devices to detect and diagnose pathogens and 
     other agents. Costs for such devices also are not included in 
     the Administration's estimate.
       To estimate potential spending for additional 
     countermeasures not mentioned in the Administration's plan, 
     CBO identified several category A, B, and C biological agents 
     and chemical and radiological agents for which 
     countermeasures exist or are under development. The set of 
     selected agents and countermeasures is not intended as a 
     prediction of which countermeasures would be acquired by 
     Project BioShield. Rather, it is intended to be 
     representative of the countermeasures that would be eligible 
     for acquisition if current research and development 
     activities succeed in producing qualified countermeasures 
     during the coming decade.
       For each of the representative biological agents, CBO 
     determined whether the countermeasure is likely to be a 
     vaccine, an antitoxin or antiviral, or a monoclonal antibody, 
     the dosage and method of delivery (intravenously or in pill 
     form), and the amount necessary to treat the population that 
     could potentially be affected. The estimate assumes that 
     vaccines would cost $30 to $40 per dose, on average, with 
     Project BioShield acquiring 500,000 to 2 million doses of 
     qualified vaccines, depending on whether the agent is 
     infectious. CBO estimates that monoclonal antibodies would 
     cost $5,000 per treatment, and that Project BioShield would 
     acquire enough to treat several hundred thousand people if 
     qualified products became available. The estimate assumes 
     that, if other types of qualified antivirals or antitoxins 
     became available, Project BioShield would acquire enough to 
     treat 500,000 people, at costs ranging from $2,000 to $5,000 
     per person for certain intravenously-administered forms. 
     Other countermeasures could be less expensive on a per-person 
     basis. For example, certain antivirals or narrow-spectrum 
     antibiotics in pill form could cost about $100 per treatment, 
     CBO estimates. Additionally, CBO estimates that per-person 
     costs would average $50 for Prussian Blue, $100 for 
     intravenous treatments for hydrogen cyanide, and $300 per 
     treatment for countermeasures for certain radiological and 
     nuclear agents. If Project BioShield acquired those types of 
     countermeasures, CBO assumes that the quantity procured would 
     be sufficient to respond to simultaneous events in several 
     large cities.
       Under optimistic assumptions about when countermeasures for 
     the representative agents would become available, the cost of 
     acquiring, storing, and replacing all qualified 
     countermeasures for those agents could total $10 billion to 
     $20 billion during the 2004-2013 period. However, CBO assumes 
     that research and development efforts for some 
     countermeasures will proceed slowly or be unsuccessful, and 
     that the Administration would not acquire all products that 
     could be designated as security countermeasures.
       Assuming appropriation of the authorized amount, CBO 
     estimates that discretionary spending to acquire and store 
     BioShield products would total $0.3 billion in 2004 and $5.5 
     billion over the 2004-2013 period. Acquisition costs would 
     comprise 70 percent to 80 percent of that amount, while 
     inventory management and replacement costs would make up the 
     balance.
       H.R. 2122 also would authorize appropriations of $5 million 
     in 2004 and such sums as may be necessary in 2005 and 2006 
     for DHS to hire analysts to assess threats from biological, 
     chemical, nuclear, and radiological agents. CBO estimates 
     that about $5 million annually would be necessary to 
     implement this provision in 2005 and 2006. We estimate that 
     this provision would increase discretionary spending by $5 
     million in 2004 and $15 million over the 2004-2006 period, 
     assuming appropriation of the estimated amounts.
       The bill would authorize appropriation of such sums as may 
     be necessary over the 2003-2006 period for DHS to acquire and 
     deploy secure facilities for the processing of classified 
     information. Those costs would depend upon what types of 
     facilities DHS would choose to acquire. Based on the 
     construction of similar installations at DOD facilities, 
     CBO estimates that DHS could require up to $20 million a 
     year for that purpose. CBO estimates that implementing 
     this provision would increase discretionary spending by 
     $80 million over the 2004-2010 period.
       CBO also estimates that implementing Project BioShield 
     would add to the administrative costs of HHS and DHS, both 
     for the

[[Page E1475]]

     contracting process and managing the stockpile. Funding for 
     those costs would come from appropriated funds. Based on 
     current spending for program support services for 
     bioterrorism-related activities (including the SNS) at the 
     Centers for Disease Control and Prevention, CBO estimates 
     that administrative costs would be about $10 million a year. 
     Subject to the appropriation of necessary amounts, CBO 
     estimates that discretionary spending for such costs would 
     increase by $7 million in 2004 and $0.1 billion over the 
     2004-2013 period.
     Research and Development Into Qualified Countermeasures
       H.R. 2122 would authorize the Secretary of HHS to expedite 
     procurement and peer review for research related to qualified 
     countermeasures. The bill also would allow the Secretary to 
     secure the services of experts or consultants with relevant 
     expertise. Implementation of these measures could increase 
     the resources required by the agency, accelerate spending, or 
     both. CBO does not have sufficient information to estimate 
     the additional resources that might be required by the agency 
     or the rate at which spending might accelerate under the 
     bill. Such spending would come from appropriated funds.
     Authorization for Medical Products for Use in Emergencies
       The FDA's regulatory process allows for expedited approval 
     of security countermeasures under current law. Pursuant to 
     the Public Health Security and Bioterrorism Preparedness and 
     Response Act of 2002, the FDA may allow certain drugs, 
     devices, and biologics defined as priority countermeasures to 
     move more quickly through the agency's regulatory process. To 
     further expedite the development of security countermeasures, 
     the FDA has implemented a rule that allows approval of 
     certain drugs based on tests in animals.
       H.R. 2122 would allow the Secretary of HHS to authorize the 
     FDA to approve the use of certain drugs or devices for use 
     during periods designated as emergencies by the Secretary of 
     HHS, DHS, or Defense. The authorization would remain in 
     effect for no more than one year, unless the Secretary 
     determines otherwise based on the nature of the emergency. 
     When the Secretary authorizes the emergency use of a product 
     that is an unapproved use of an approved product, the bill 
     would provide some flexibility to manufacturers in 
     carrying, out activities under the emergency use 
     authorization.
       Based on information from Administration officials, CBO 
     expects that implementing this provision in H.R. 2122 would 
     not increase costs to the FAA. Over the past year, the FDA 
     has hired about 100 people to review drug applications and 
     provide assistance to companies engaged in research and 
     development into security countermeasures. Thus, the agency 
     already has the infrastructure to handle the additional 
     authority related to the proposed emergency-use authorization 
     and would not require additional resources. Therefore, CBO 
     estimates that this provision of H.R. 2122 would have no 
     budgetary effect.


                         PREVIOUS CBO ESTIMATES

       S. 15, the Project BioShield Act of 2003, as reported by 
     the Senate Committee on Health, Education, Labor, and 
     Pensions on March 25, 2003, would amend the PHSA to create 
     permanent, indefinite funding authority for the procurement 
     of certain biomedical countermeasures. In its cost estimate 
     dated May 7, 2003, CBO estimated that enacting S. 15 would 
     increase direct spending by $270 million in 2004 and $8.1 
     billion over the 2004-2013 period.
       Although both H.R. 2122 and S. 15 would authorize programs 
     to procure countermeasures to protect the public health 
     against terrorism, H.R. 2122 would not affect direct 
     spending; instead, the bill would authorize appropriations of 
     up to $5.6 billion over the 2004-2013 period. Estimated 
     spending under H.R. 2122 is less than under S. 15 because the 
     House bill would authorize a set amount of appropriations, 
     whereas the Senate bill would provide unlimited direct 
     spending authority.
       In several areas, H.R. 2122 would allow the Secretary more 
     flexibility regarding what products could be procured and how 
     contracts would be structured. H.R. 2122 would allow the 
     procurement of countermeasures even if they have a 
     significant commercial application, while S. 15 would 
     restrict the procurement authority to those without such 
     applications. While S. 15 would require the Secretary to 
     determine that a countermeasure is likely to be approved by 
     the FDA within five years as a condition of procurement, H.R. 
     2122 would require only that the Secretary consider whether a 
     five-year limit is feasible. H.R. 2122 would provide 
     additional flexibility in contracting by permitting the 
     Secretary to extend first-time contracts to eight years 
     (versus five in S. 15) and would allow the Secretary 
     discretion to provide a 10 percent advance to companies 
     developing new products. Those provisions would accelerate 
     spending relative to S. 15.
       On June 6, 2003, CBO transmitted a cost estimate for H.R. 
     2122 as ordered reported by the House Committee on Energy and 
     Commerce on May 15, 2003. On the same date, CBO transmitted a 
     cost estimate for H.R. 2122 as ordered reported by the House 
     Committee on Government Reform on May 22, 2003. Those 
     versions of H.R. 2122 are nearly identical to the version of 
     H.R. 2122 approved by the Select Committee on Homeland 
     Security. However, H.R. 2122 as approved by the Select 
     Committee on Homeland Security contains two additional 
     authorizations--an estimated $15 million over the 2004-2006 
     period for hiring analysts and such sums as may be necessary 
     over the 2003-2006 period for the construction of secure 
     installations.


              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

       H.R. 2122 contains no intergovernmental or private-sector 
     mandates as defined in UMRA and would impose no costs on 
     state, local, or tribal governments.
       Estimate prepared by: Federal Costs: Jeanne De Sa (226-
     9010) and Sam Papenfuss (226-2840); Impact on State, Local, 
     and Tribal Governments: Leo Lex (225-3220); and Impact on the 
     Private Sector: Samuel Kina (226-2666).
       Estimate approved by: Robert A. Sunshine, Assistant 
     Director for Budget Analysis.

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