[Congressional Record (Bound Edition), Volume 147 (2001), Part 17]
[Senate]
[Pages 23787-23803]
[From the U.S. Government Publishing Office, www.gpo.gov]



         STATEMENTS ON INTRODUCED BILLS AND JOINTS RESOLUTIONS

      By Mr. THOMAS (for himself and Mrs. Lincoln):
  S. 1760. A bill to amend title XVIII of the Social Security Act to 
provide for the coverage of marriage and family therapist services and 
mental health counselor services under part B of the Medicare Program, 
and for other purposes; to the Committee on Finance.
  Mr. THOMAS. Mr. President, I am pleased to rise today to introduce 
the Seniors Mental Health Access Improvement Act of 2001 with my 
distinguished colleague from Arkansas, Mrs. Lincoln. Specifically, the 
Seniors Mental Health Access Improvement Act of 2001 permits mental 
health counselors and marriage and family therapists to bill Medicare 
for their services. This will result in an increased choice of 
providers for seniors and enhance their ability to access mental health 
services in their communities.
  This legislation is especially crucial to rural seniors who are often 
forced to travel long distances to utilize the services of mental 
health providers currently recognized by the Medicare program. Rural 
communities have difficulty recruiting and retaining providers, 
especially mental health providers. In many small towns a mental health 
counselor or a marriage and family therapist is the only mental health 
care provider in the area. Medicare law, as it exists today, compounds 
the situation because only psychiatrists, clinical psychologists, 
clinical social workers and clinical nurse specialists are able to bill 
Medicare for their services.
  It is time the Medicare program recognized the qualifications of 
mental health counselors and marriage and family therapists as well as 
the critical role they play in the mental health care infrastructure. 
These providers go through rigorous training, similar to the curriculum 
of masters level social workers, and yet are excluded from the Medicare 
program.
  Particularly troubling to me is the fact that seniors have dispro-
portionally higher rates of depression and suicide than other 
populations. Additionally, 75 percent of the 518 nationally designated 
Mental Health Professional Shortage Areas are located in rural areas 
and one-fifth of all rural counties have no mental health services of 
any kind. Frontier counties have even more drastic numbers as 95 
percent do not have a psychiatrist, 68 percent do not have a 
psychologist and 78 percent do not have a social worker. It is quite 
obvious we have an enormous task ahead of us to

[[Page 23788]]

reduce these staggering statistics. Providing mental health counselors 
and marriage and family therapists the ability to bill Medicare for 
their services is a key part of the solution.
  Virtually all of my State of Wyoming is a mental health professional 
shortage area and will greatly benefit from this legislation. Wyoming 
has 169 psychologists, 121 psychiatrists, and 247 social workers for a 
total of 537 Medicare eligible mental health providers. Enactment of 
the Seniors Mental Health Access Improvement Act of 2001 will double 
the number of mental health providers available to seniors in my State 
with the addition of 517 mental health counselors and 55 marriage and 
family therapists currently licensed in the State.
  In crafting this legislation Senator Lincoln and I worked with 
numerous outside organizations with an interest in this issue. As a 
result of this collaboration, the ``Seniors Mental Health Access 
Improvement Act of 2001'' is strongly supported by the American 
Counseling Association, the Wyoming Counseling Association, the 
American Mental Health Counselors Association, the Arkansas Mental 
Health Counselors Association, the American Association for Marriage 
and Family Therapy, the Wyoming and Arkansas Chapters of the 
Association for Marriage and Family Therapy, the California Association 
of Marriage and Family Therapists, and the National Rural Health 
Association.
  I believe this legislation is critically important to the health and 
well-being of our Nation's Seniors and I strongly urge all my 
colleagues to become a cosponsor.
  Mr. President, I ask unanimous consent that the text of the bill and 
letters of endorsement from supporting organizations be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1760

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Seniors Mental Health Access 
     Improvement Act of 2001''.

     SEC. 2. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES 
                   AND MENTAL HEALTH COUNSELOR SERVICES UNDER PART 
                   B OF THE MEDICARE PROGRAM.

       (a) Coverage of Services.--
       (1) In general.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)), as amended by sections 102(a) 
     and 105(a) of the Medicare, Medicaid, and SCHIP Benefits 
     Improvement and Protection Act of 2000 (114 Stat. 2763A-468 
     and 2763A-471), as enacted into law by section 1(a)(6) of 
     Public Law 106-554, is amended--
       (A) in subparagraph (U), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (V)(iii), by inserting ``and'' after 
     the semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(W) marriage and family therapist services (as defined in 
     subsection (ww)(1)) and mental health counselor services (as 
     defined in subsection (ww)(3));''.
       (2) Definitions.--Section 1861 of such Act (42 U.S.C. 
     1395x), as amended by sections 102(b) and 105(b) of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-468 and 2763A-471), 
     as enacted into law by section 1(a)(6) of Public Law 106-554, 
     is amended by adding at the end the following new subsection:

     ``Marriage and Family Therapist Services; Marriage and Family 
  Therapist; Mental Health Counselor Services; Mental Health Counselor

       ``(ww)(1) The term `marriage and family therapist services' 
     means services performed by a marriage and family therapist 
     (as defined in paragraph (2)) for the diagnosis and treatment 
     of mental illnesses, which the marriage and family therapist 
     is legally authorized to perform under State law (or the 
     State regulatory mechanism provided by State law) of the 
     State in which such services are performed, as would 
     otherwise be covered if furnished by a physician or as an 
     incident to a physician's professional service, but only if 
     no facility or other provider charges or is paid any amounts 
     with respect to the furnishing of such services.
       ``(2) The term `marriage and family therapist' means an 
     individual who--
       ``(A) possesses a master's or doctoral degree which 
     qualifies for licensure or certification as a marriage and 
     family therapist pursuant to State law;
       ``(B) after obtaining such degree has performed at least 2 
     years of clinical supervised experience in marriage and 
     family therapy; and
       ``(C) in the case of an individual performing services in a 
     State that provides for licensure or certification of 
     marriage and family therapists, is licensed or certified as a 
     marriage and family therapist in such State.
       ``(3) The term `mental health counselor services' means 
     services performed by a mental health counselor (as defined 
     in paragraph (2)) for the diagnosis and treatment of mental 
     illnesses which the mental health counselor is legally 
     authorized to perform under State law (or the State 
     regulatory mechanism provided by the State law) of the State 
     in which such services are performed, as would otherwise be 
     covered if furnished by a physician or as incident to a 
     physician's professional service, but only if no facility or 
     other provider charges or is paid any amounts with respect to 
     the furnishing of such services.
       ``(4) The term `mental health counselor' means an 
     individual who--
       ``(A) possesses a master's or doctor's degree in mental 
     health counseling or a related field;
       ``(B) after obtaining such a degree has performed at least 
     2 years of supervised mental health counselor practice; and
       ``(C) in the case of an individual performing services in a 
     State that provides for licensure or certification of mental 
     health counselors or professional counselors, is licensed or 
     certified as a mental health counselor or professional 
     counselor in such State.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of such Act (42 U.S.C. 1395k(a)(2)(B)) is 
     amended by adding at the end the following new clause:
       ``(v) marriage and family therapist services and mental 
     health counselor services;''.
       (4) Amount of payment.--Section 1833(a)(1) of such Act (42 
     U.S.C. 1395l(a)(1)), as amended by sections 105(c) and 223(c) 
     of the Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-472 and 2763A-489), 
     as enacted into law by section 1(a)(6) of Public Law 106-554, 
     is amended--
       (A) by striking ``and (U)'' and inserting ``(U)''; and
       (B) by inserting before the semicolon at the end the 
     following: ``, and (V) with respect to marriage and family 
     therapist services and mental health counselor services under 
     section 1861(s)(2)(W), the amounts paid shall be 80 percent 
     of the lesser of the actual charge for the services or 75 
     percent of the amount determined for payment of a 
     psychologist under clause (L)''.
       (5) Exclusion of marriage and family therapist services and 
     mental health counselor services from skilled nursing 
     facility prospective payment system.--Section 1888(e) of the 
     Social Security Act (42 U.S.C. 1395yy(e)) is amended--
       (A) in paragraph (2)(A)(i)(II), by striking ``clauses (ii) 
     and (iii)'' and inserting ``clauses (ii) through (iv)''; and
       (B) by adding at the end of paragraph (2)(A) the following 
     new clause:
       ``(iv) Exclusion of certain mental health services.--
     Services described in this clause are marriage and family 
     therapist services (as defined in section 1861(ww)(1)) and 
     mental health counselor services (as defined in section 
     1861(ww)(3)).''.
       (6) Inclusion of marriage and family therapists and mental 
     health counselors as practitioners for assignment of 
     claims.--Section 1842(b)(18)(C) of such Act (42 U.S.C. 
     1395u(b)(18)(C)), as amended by section 105(d) of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-472), as enacted into 
     law by section 1(a)(6) of Public Law 106-554, is amended by 
     adding at the end the following new clauses:
       ``(vii) A marriage and family therapist (as defined in 
     section 1861(ww)(2)).
       ``(viii) A mental health counselor (as defined in section 
     1861(ww)(4)).''.
       (b) Coverage of Certain Mental Health Services Provided in 
     Certain Settings.--
       (1) Rural health clinics and federally qualified health 
     centers.--Section 1861(aa)(1)(B) of the Social Security Act 
     (42 U.S.C. 1395x(aa)(1)(B)) is amended by inserting ``, by a 
     marriage and family therapist (as defined in subsection 
     (ww)(2)), by a mental health counselor (as defined in 
     subsection (ww)(4)),'' after ``by a clinical psychologist (as 
     defined by the Secretary)''.
       (2) Hospice programs.--Section 1861(dd)(2)(B)(i)(III) of 
     such Act (42 U.S.C. 1395x(dd)(2)(B)(i)(III)) is amended by 
     inserting ``or a marriage and family therapist (as defined in 
     subsection (ww)(2))'' after ``social worker''.
       (c) Authorization of Marriage and Family Therapists To 
     Develop Discharge Plans for Post-Hospital Services.--Section 
     1861(ee)(2)(G) of the Social Security Act (42 U.S.C. 
     1395x(ee)(2)(G)) is amended by inserting ``marriage and 
     family therapist (as defined in subsection (ww)(2)),'' after 
     ``social worker,''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to services furnished on or after 
     January 1, 2002.

[[Page 23789]]

     
                                  ____
                              American Counseling Association,

                                Alexandria, VA, November 27, 2001.
     Hon. Craig Thomas,
     U.S. Senate,
     Washington, DC.
       Dear Senator Thomas: I am writing on behalf of the American 
     Counseling Association, which with over 53,000 members is the 
     nation's largest non-profit membership organization 
     representing state-licensed professional mental health 
     counselors, to express our strong support for your 
     legislation, the ``Seniors Mental Health Access Improvement 
     Act of 2001''. We applaud your leadership in introducing this 
     legislation.
       Medicare's mental health benefit currently excludes two 
     core mental health professions: licensed professional 
     counselors and licensed marriage and family therapists. 
     Statistics such as those included in the attached fact sheet 
     show that Medicare beneficiaries are not getting the mental 
     health treatment they need. Lack of access to providers is 
     one of the primary factors involved.
       As with other areas of health care, accessing mental health 
     services is especially problematic in rural areas. In many 
     underserved communities, licensed professional counselors are 
     the only mental health specialists available. We feel 
     strongly that proposals to improve rural Medicare 
     beneficiaries' access to mental health care must include 
     expanding the pool of covered providers. However, access to 
     providers is not only a rural issue. An article cited on the 
     enclosed fact sheet, recently published by the American 
     Psychiatric Association, states that ``the supply of both 
     specialists and resources cannot meet current or future 
     demands'' for mental health treatment of older Americans.
       Coverage of licensed professional counselors under Medicare 
     is a common-sense step toward ensuring that all beneficiaries 
     get the help they need. There are over 81,000 professional 
     counselors licensed as master's level mental health 
     professionals in Wyoming and 44 other states across the 
     country. These providers meet education, training, and 
     examination requirements on par with those of clinical social 
     workers, who have been covered under Medicare for over ten 
     years.
       Thank you for your leadership in introducing this important 
     legislation. We look forward to working with you to gain its 
     enactment, and I urge you and your staff to call on us if we 
     can be of any assistance.
           Sincerely,
                                                     Jane Goodman,
     President.
                                  ____



                              American Counseling Association,

                                Alexandria, VA, November 27, 2001.
     Hon. Blanche L. Lincoln,
     U.S. Senate,
     Washington, DC.
       Dear Senator Lincoln: I am writing on behalf of the 
     American Counseling Association, which with over 53,000 
     members is the nation's largest non-profit membership 
     organization representing state-licensed professional mental 
     health counselors, to express our strong support for your 
     legislation, the ``Seniors Mental Health Access Improvement 
     Act of 2001''. We applaud your leadership in introducing this 
     legislation.
       Medicare's mental health benefit currently excludes two 
     core mental health professions: licensed professional 
     counselors and licensed marriage and family therapists. 
     Statistics such as those included in the attached fact sheet 
     show that Medicare beneficiaries are not getting the mental 
     health treatment they need. Lack of access to providers is 
     one of the primary factors involved.
       As with other areas of health care, accessing mental health 
     services is especially problematic in rural areas. In many 
     underserved communities, licensed professional counselors are 
     the only mental health specialists available. We feel 
     strongly that proposals to improve rural Medicare 
     beneficiaries' access to mental health care must include 
     expanding the pool of covered providers. However, access to 
     providers is not only a rural issue. An article cited on the 
     enclosed fact sheet, recently published by the American 
     Psychiatric Association, states that ``the supply of both 
     specialists and resources cannot meet current or future 
     demands'' for mental health treatment of older Americans.
       Coverage of licensed professional counselors under Medicare 
     is a common-sense step toward ensuring that all beneficiaries 
     get the help they need. There are over 81,000 professional 
     counselors licensed as master's level mental health 
     professionals in Arkansas and 44 other states across the 
     country. These providers meet education, training, and 
     examination requirements on par with those of clinical social 
     workers, who have been covered under Medicare for over ten 
     years.
       Thank you for your leadership in introducing this important 
     legislation. We look forward to working with you to gain its 
     enactment, and I urge you and your staff to call on us if we 
     can be of any assistance.
           Sincerely,
                                                     Jane Goodman,
     President.
                                  ____



                               Wyoming Counseling Association,

                                                November 27, 2001.
     Hon. Craig Thomas,
     U.S. Senate,
     Washington, DC
       Dear Senator Thomas: The Wyoming Counseling Association is 
     pleased to convey its strong support of your legislation, the 
     ``Seniors Mental Health Access Improvement Act of 2001''. We 
     are proud of your leadership on mental health issues, as 
     evidenced by your introduction of this and other legislation, 
     and your support of S. 543, the ``Mental Health Equitable 
     Treatment Act of 2001''.
       Wyoming's residents often have only limited--if any--access 
     to mental health professionals. There simply aren't enough 
     providers. Given this fact, it makes no sense to continue to 
     exclude licensed professional counselors from Medicare 
     coverage, when similarly-trained providers are covered. In 
     many parts of the state, licensed professional counselors are 
     the only mental health specialists around.
       We believe that establishing Medicare coverage of licensed 
     professional counselors is a cost-effective means of 
     improving the health and well-being of enrollees. The more 
     than 500 professional counselors licensed in Wyoming should 
     be allowed to help meet their mental health needs. It should 
     jolt Congress into action to know that older Americans are 
     the demographic group in the U.S. most at risk of committing 
     suicide. This must be remedied.
       Please let us know if there is anything we can do to assist 
     you on mental health issues, and thank you again for your 
     leadership, initiative, and hard work.
           Sincerely,
     Karen Robertson,
       President.
     Dr. David L. Beck,
       Past-President.
     Lesley Travers,
       President-elect.
                                  ____

                                            American Mental Health


                                       Counselors Association,

                                Alexandria, VA, November 27, 2001.
     Hon. Craig Thomas,
     U.S. Senate, Hart Senate Office Building, Washington, DC
       Dear Senator Thomas: I am writing on behalf of the American 
     Mental Health Counselors Association (AMHCA) to express our 
     strong support for the Seniors Mental Health Access 
     Improvement Act, legislation to expand access to mental 
     health providers in the Medicare program. As president of 
     AMHCA and a Licensed Mental Health Counselor (LMHC), I 
     commend you and Senator Lincoln for introducing this 
     important legislation.
       AMHCA is the nation's largest professional organization 
     exclusively representing the mental health counseling 
     profession. Our members practice in a variety of settings, 
     including hospitals, community mental health centers, managed 
     behavioral health care organizations, employee assistance 
     plans, substance abuse treatment centers, and private 
     practice. Currently, there are more than 80,000 licensed or 
     certified professional counselors practicing in the United 
     States, including many in rural areas where access to mental 
     health care is often scarce.
       As you know, Medicare covers the services of independently 
     practicing psychiatrists, clinical psychologists, clinical 
     social workers, and clinical nurse specialists, but does not 
     recognize mental health counselors or marriage and family 
     therapists as separately reimbursable mental health 
     providers. Specifically, the Seniors Mental Health Access 
     Improvement Act would correct this inequity by including 
     mental health counselors and marriage and family therapists 
     among the list of providers who can deliver mental health 
     services to Medicare beneficiaries, provided they are legally 
     authorized to deliver such care under state law. Enactment of 
     this provision would increase access to and the availability 
     of mental health services to Medicare beneficiaries, 
     particularly for those seniors who reside in rural and 
     underserved areas. The inclusion of mental health counselors 
     and marriage and family therapists as Medicare providers 
     would also afford beneficiaries greater choice among 
     qualified providers.
       Again, thank you for the leadership you have shown in 
     introducing this legislation and for your commitment to 
     ensuring greater access for seniors affected by mental 
     illness. If I can be of assistance to you as you work towards 
     the enactment of the Seniors Mental Health Access Improvement 
     Act, please feel free to contact me. Beth Powell, AMHCA's 
     Director of Public Policy and Professional Issues, is also 
     available to assist you and your staff.
           Sincerely,
                                                   Midge Williams,
     President.
                                  ____

                                            American Mental Health


                                       Counselors Association,

                                 Alexandria, VA, November 28, 2001
     Hon. Blanche L. Lincoln,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC
       Dear Senator Lincoln: I am writing on behalf of the 
     American Mental Health Counselors Association (AMHCA) to 
     express our strong support of the Seniors Mental Health 
     Access Improvement Act, legislation to expand access to 
     mental health providers in the Medicare program. As president 
     of AMHCA and a Licensed Mental Health Counselor (LMHC), I 
     commend you and Senator

[[Page 23790]]

     Thomas for introducing this important legislation.
       AMHCA is the nation's largest professional organization 
     exclusively representing the mental health counseling 
     profession. Our members practice in a variety of settings, 
     including hospitals, community mental health centers, managed 
     behavioral health care organizations, employee assistance 
     plans, substance abuse treatment centers, and private 
     practice. Currently, there are more than 80,000 licensed or 
     certified professional counselors practicing in the United 
     States, including many in rural areas where access to mental 
     health care is often scarce. The Arkansas Mental Health 
     Counselors Association (ArMHCA), a state chapter of AMHCA, 
     represents the interests of mental health counselors 
     practicing in your state.
       As you know, Medicare covers the services of independently 
     practicing psychiatrists, clinical psychologists, clinical 
     social workers, and clinical nurse specialists, but does not 
     recognize mental health counselors or marriage and family 
     therapists as separately reimbursable mental health 
     providers. Specifically, the Seniors Mental Health Access 
     Improvement Act would correct this inequity by including 
     mental health counselors and marriage and family therapists 
     among the list of providers who can deliver mental health 
     services to Medicare beneficiaries, provided they are legally 
     authorized to deliver such care under state law. Enactment of 
     this provision would increase access to and the availability 
     of mental health services to Medicare beneficiaries, 
     particularly for those seniors who reside in rural and 
     underserved areas. The inclusion of mental health counselors 
     and marriage and family therapists as Medicare providers 
     would also afford beneficiaries greater choice among 
     qualified providers.
       Again, thank you for the leadership you have shown in 
     introducing this legislation and for your commitment to 
     ensuring greater access for seniors affected by mental 
     illness. If I can be of assistance to you as you work towards 
     the enactment of the Seniors Mental Health Access Improvement 
     Act, please feel free to contact me. Beth Powell, AMHCA's 
     Director of Public Policy and Professional Issues, is also 
     available to assist you and your staff.
           Sincerely,
                                                   Midge Williams,
     President.
                                  ____

                                            Arkansas Mental Health


                                       Counselors Association,

                                 Jonesboro, AR, November 27, 2001.
     Hon. Blanche L. Lincoln,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Lincoln: I am writing on behalf of the 
     Arkansas Mental Health Counselors Association (ArMHCA) to 
     express our strong support for the Seniors Mental Health 
     Access Improvement Act and to convey our sincere appreciation 
     to you for introducing this legislation. As a Licensed 
     Professional Counselor (LPC) and a constituent, I want to 
     express to you the importance of this legislation to LPCs in 
     our state and to the nation's 39 million Medicare 
     beneficiaries.
       Mental health counselors-called Licensed Professional 
     Counselor in Arkansas are mental health professionals with a 
     master's or doctoral degree in counseling or related 
     disciplines who provide services along a continuum of care. 
     Currently, 45 states and the District of Columbia license or 
     certify mental health counselors to independently provide 
     mental health services, including the diagnosis and treatment 
     of mental and emotional disorders. LPCs practice in a variety 
     of settings, including hospitals, community mental health 
     centers, managed behavioral health care organizations, 
     employee assistance plans, substance abuse treatment centers, 
     and private practice.
       Medicare currently covers the services of independently 
     practicing psychiatrists, clinical psychologists, clinical 
     social workers, and clinical nurse specialists, however; it 
     does not recognize mental health counselors or marriage and 
     family therapists as separately reimbursable mental health 
     providers. The Seniors Mental Health Access Improvement Act 
     corrects this oversight by including mental Health counselors 
     and marriage and family therapist among the list of providers 
     who deliver mental health services to Medicare beneficiaries, 
     provided they are legally authorized to perform the services 
     under state law. Enactment of this provision would increase 
     access to and the availability of mental health services to 
     Medicare beneficiaries, particularly for those seniors who 
     reside in rural and underserved area. The inclusion of mental 
     health counselors and marriage and family therapists in the 
     program would also afford beneficiaries a choice among 
     qualified providers.
       Again, thank you for the leadership you have shown in 
     introducing this important legislation. If I can be of 
     assistance to you as your work towards enactment of the 
     Seniors Mental Health Improvement Access Act please feel free 
     to contact me. Beth Powell, AMHCA's Director of Public and 
     Professional Issues, is also available to assist you and your 
     staff.
           Sincerely,
                                                      Dee Kernodle
     President.
                                  ____

                                          American Association for


                                  Marriage and Family Therapy,

                                 Washington, DC, December 3, 2001.
     Hon. Craig Thomas,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Thomas: The American Association for Marriage 
     and Family Therapy is writing on behalf of the 46,000 
     marriage and family therapists throughout the United States 
     to commend you for sponsoring the Seniors Mental Health 
     Access Improvement Act of 2001. This crucial legislation to 
     expand the mental health benefits for our elderly will go a 
     long way towards improving Medicare beneficiaries' access to 
     critical mental health services provided by Marriage and 
     Family Therapist (MFTs) and Mental Health Counselors (MHCs) 
     across the nation.
       As you know, mental illness is a major problem for many 
     Americans, and particularly for the elderly. Research 
     demonstrates that depression is disproportionately high among 
     older persons, as is the incidence of suicide. The Surgeon 
     General's Report on Mental Health has indicated that there 
     are effective treatments for these and other mental 
     illnesses. The Seniors Mental Health Access Improvement Act 
     of 2001 helps make these treatments accessible to elderly 
     citizens. By expanding the pool of qualified providers, the 
     bill also achieves the important objective of increasing 
     access to mental health services for elderly in rural areas, 
     where there is a recognized shortage of professionals.
       Passage of the Seniors Mental Health Access Improvement Act 
     of 2001 will ensure that Medicare beneficiaries in need of 
     mental health services will have the same freedom to choose a 
     mental health professional available in their community as 
     the non-Medicare population. The Archives of General 
     Psychiatry projects that the number of people over 65 years 
     with psychiatric disorders will increase from about 4 million 
     in 1970 to 15 million in 2030. It also indicates that the 
     current health care system is unprepared to meet the upcoming 
     crisis in geriatric mental health. Providing access to 
     licensed MFTs and MHCs will help ensure that there are an 
     adequate number of providers available to meet the needs of 
     the growing elderly population.
       Your leadership and support to address the mental health 
     needs of our seniors is greatly appreciated. It is about time 
     the Medicare program is structured to respond to the demands 
     of the elderly population it serves. AAMFT hopes the Seniors 
     Mental Health Improvement Act of 2001 will become law. We 
     look forward to working with you to meet this objective. 
     Thank you again for your commitment to improving the lives of 
     the elderly.
           Sincerely,

                                             David M. Bergman,

                                                       Director of
     Legal and Government Affairs.
                                  ____

                                          American Association for


                                  Marriage and Family Therapy,

                                 Washington, DC, December 3, 2001.
     Hon. Blanche Lambert Lincoln,
     Dirksen Senate Office Building,
     Washington, DC.
       Dear Senator Lincoln: The American Association for Marriage 
     and Family Therapy is writing on behalf of the 46,000 
     marriage and family therapists throughout the United States 
     to commend you for sponsoring the Seniors Mental Health 
     Access Improvement Act of 2001. This crucial legislation to 
     expand the mental health benefits for our elderly will go a 
     long way towards improving Medicare beneficiaries' access to 
     critical mental health services provided by Marriage and 
     Family Therapist (MFTs) and Mental health Counselors (MHCs) 
     across the nation.
       As you know, mental illness is a major problem for many 
     Americans, and particularly for the elderly. Research 
     demonstrates that depression is disproportionately high among 
     older persons, as is the incidence of suicide. The Surgeon 
     General's Report on Mental Health has indicated that there 
     are effective treatments for these and other mental 
     illnesses. The Seniors Mental Health Access Improvement Act 
     of 2001 helps make these treatments accessible to elderly 
     citizens. By expanding the pool of qualified providers, the 
     bill also achieves the important objective of increasing 
     access to mental health services for elderly in rural areas, 
     where there is a recognized shortage of professionals.
       Passage of the Seniors Mental Health Access Improvement Act 
     of 2001 will ensure that Medicare beneficiaries in need of 
     mental health services will have the same freedom to choose a 
     mental health professional available in their community as 
     the non-Medicare population. The Archives of General 
     Psychiatry projects that the number of people over 65 years 
     with psychiatric disorders will increase from about 4 million 
     in 1970 to 15 million in 2030. It also indicates that the 
     current health care system is unprepared to meet the upcoming 
     crisis in geriatric mental health. Providing access to 
     licensed MFTs and MHCs will help ensure that there are an 
     adequate number of providers available to meet the needs of 
     the growing elderly population.
       Your leadership and support to address the mental health 
     needs of our seniors is greatly

[[Page 23791]]

     appreciated. It is about time the Medicare program is 
     structured to respond to the demands of the elderly 
     population it serves. AAMFT hopes the Seniors Mental Health 
     Improvement Act of 2001 will become law. We look forward to 
     working with you to meet this objective. Thank you again for 
     your commitment to improving the lives of the elderly.
           Sincerely,

                                             David M. Bergman,

                                                       Director of
     Legal and Government Affairs.
                                  ____

                                           Wyoming Association for


                                  Marriage and Family Therapy,

                                   Jackson, WY, November 30, 2001.
     Hon. Craig Thomas,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Thomas: On behalf of the Wyoming Association 
     for Marriage and Family Therapy, I want to thank you for 
     agreeing to sponsor the Seniors Mental Health Improvement Act 
     of 2001.
       This important legislation will go a long way toward 
     improving Medicare beneficiaries' access to critical mental 
     health services in our state. As you know, more than 90 
     percent of Wyoming has been designated by the federal 
     government as a mental health professional shortage area. By 
     authorizing Medicare coverage for both Marriage and Family 
     Therapists (MFTs) and Mental Health Counselors (MHCs), you 
     are more than doubling the number of mental health 
     professionals available to provide services to the Medicare 
     population in these underserved areas.
       Your legislation will also ensure that Wyoming 
     beneficiaries in need of mental health services will have the 
     same freedom to choose the mental health professional 
     available in their community as the non-Medicare population. 
     As you are aware, our state has already authorized MFTs to 
     provide a wide range of mental health services covered by the 
     Medicare program. Unfortunately, because Medicare does not 
     currently recognize MFTs, Medicare beneficiaries must often 
     travel hundreds of miles to be seen by a mental health 
     professional who is recognized by the Medicare program. This, 
     despite the fact that there may be a Marriage and Family 
     Therapist in their community that the state has already 
     deemed qualified to provide the covered services.
       Your support for improved access to mental health services 
     is greatly appreciated. We look forward to working with you 
     on this important legislation. I would also personally like 
     to send my best wishes to you and Susan and hope that all is 
     well in Washington.
           Sincerely,
                                                      Cindy Knight
     President.
                                  ____

                                          Arkansas Association for


                                  Marriage and Family Therapy,

                                                 December 1, 2001.
     Hon. Blanche Lambert Lincoln,
     Dirksen Senate Office Building,
     Washington, DC.
       Dear Senator Lincoln: I was part of a coalition of four 
     mental health organizations that wrote to you last week on 
     behalf of the Seniors Mental Health Improvement Act of 2001. 
     However, I wanted to address that again with you specifically 
     from the Arkansas Association for Marriage and Family 
     Therapy. This is such an important piece of legislation on 
     behalf of our aging population.
       This important legislation will go a long way towards 
     improving Medicare beneficiaries' access to critical mental 
     health services in our state. As you know, more than 90 
     percent of Arkansas has been designated by the federal 
     government as a mental health professional shortage area. By 
     authorizing Medicare coverage for both Marriage and Family 
     Therapists (MFTs) and Licensed Professional Counselors (LPCs) 
     or Mental Health counselors (MHCs) you are more than doubling 
     the number of mental health professionals available to 
     provide services to the Medicare population in these under-
     served regions.
       Your legislation will also ensure that Arkansas Medicare 
     beneficiaries in need of mental health services will have the 
     same freedom to choose the mental health professional 
     available in their community as the non-Medicare population. 
     As you are aware, our state has already authorized MFTs to 
     provide a wide range of mental health services covered by the 
     Medicare program. Unfortunately, because Medicare does not 
     currently recognize MFTs, Medicare beneficiaries must often 
     travel hundreds of miles to be seen by a mental health 
     professional that is recognized by Medicare. In my practice, 
     I am aware of long waits for seniors to see providers due to 
     the few and the overload of those providers. This, despite 
     the fact that there may be a Marriage and Family Therapist in 
     their community that the state has already deemed qualified 
     to provide the covered services.
       Your support for improved access to mental health services 
     is greatly appreciated. We look forward to working with you 
     on this important legislation.
           Sincerely,
                                                       Dell Tyson,
     President.
                                  ____



                            National Rural Health Association,

                                Kansas City, MO, December 3, 2001.
     Hon. Craig Thomas,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Senator Thomas: On behalf of the National Rural Health 
     Association, I would like to convey our strong support for 
     the Seniors Mental Health Access Improvement Act of 2001.
       While a lack of primary care services in rural and frontier 
     areas has long been acknowledged, the scarcity of rural 
     mental health services has only recently received increased 
     attention. At the end of 1997, 76% of designated mental 
     health professional shortage areas were located in non-
     metropolitan areas with a total population of over 30 million 
     Americans. Currently there is an increased need for 
     intervention by mental health care professionals to help 
     people cope with the aftermath of the September 11 terrorist 
     attacks as well as the ongoing war on terrorism. Because 
     there is less access to mental health care in rural America, 
     rural residents will have a subsequent lack of professional 
     guidance in dealing with the recent trauma experienced by our 
     country.
       The Seniors Mental Health Access Improvement Act of 2001 
     would help provide increased access to mental health car 
     services in rural and frontier areas by allowing Licensed 
     Professional Counselors and Marriage and Family Therapists to 
     bill Medicare for their services and be paid 80 percent of 
     the lesser of the actual charge for the services or 75 
     percent of the amount determined for payment of a 
     psychologist.
       The membership of the NRHA appreciates your bringing 
     attention to the critical issue of access to mental health 
     care in rural areas as well as your ongoing leadership on 
     rural health issues. The NRHA stands ready to work with you 
     on enactment of the Seniors Mental Health Access Improvement 
     Act of 2001, which would help to increase the availability of 
     mental health care in rural and frontier areas.
           Sincerely,
                                                  Charlotte Hardt,
     President.
                                  ____



                            National Rural Health Association,

                                Kansas City, MO, December 3, 2001.
     Hon. Blanche Lincoln,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Senator Lincoln: On behalf of the National Rural 
     Health Association, I would like to convey our strong support 
     for the Seniors Mental Health Access Improvement Act of 2001.
       While a lack of primary care services in rural and frontier 
     areas has long been acknowledged, the scarcity of rural 
     mental health services has only recently received increased 
     attention. At the end of 1997, 76% of designated mental 
     health professional shortage areas were located in non-
     metropolitan areas with a total population of over 30 million 
     Americans. Currently there is an increased need for 
     intervention by mental health care professionals to help 
     people cope with the aftermath of the September 11 terrorist 
     attacks as well as the ongoing war on terrorism. Because 
     there is less access to mental health care in rural America, 
     rural residents will have a subsequent lack of professional 
     guidance in dealing with the recent trauma experienced by our 
     country.
       The Seniors Mental Health Access Improvement Act of 2001 
     would help provide increased access to mental health car 
     services in rural and frontier areas by allowing Licensed 
     Professional Counselors and Marriage and Family Therapists to 
     bill Medicare for their services and be paid 80 percent of 
     the lesser of the actual charge for the services or 75 
     percent of the amount determined for payment of a 
     psychologist.
       The membership of the NRHA appreciates your bringing 
     attention to the critical issue of access to mental health 
     care in rural areas as well as your ongoing leadership on 
     rural health issues. The NRHA stands ready to work with you 
     on enactment of the Seniors Mental Health Access Improvement 
     Act of 2001, which would help to increase the availability of 
     mental health care in rural and frontier areas.
           Sincerely,
                                                  Charlotte Hardt,
     President.
                                  ____

                                         California Association of


                               Marriage and Family Therapists,

                                 San Diego, CA, November 19, 2001.
     Re Medicare Legislation to Recognize Marriage and Family 
         Therapists and Professional Counselors.
     Hon. Craig Thomas,
     U.S. Senate,
     Washington, DC.

       Dear Senator Thomas: We are writing to you in recognition 
     and support of your willingness to cosponsor legislation that 
     would dramatically improve access to mental health services 
     for Medicare beneficiaries. By adding licensed marriage and 
     family therapists and licensed professional counselors, it 
     will open many opportunities within Medicare for patients to 
     locate and receive therapy from appropriately trained and 
     qualified professionals.
       On behalf of the 24,500 members of the California 
     Association of Marriage and Family

[[Page 23792]]

     Therapists, we support your willingness to co-sponsor this 
     legislation. Under California law, licensed marriage and 
     family therapists are legally authorized to provide mental 
     health services and are reimbursed by most all third party 
     payers for the diagnosis and treatment of mental disorders. 
     However, because Medicare does not recognize this particular 
     discipline, California licensed marriage and family 
     therapists are precluded from providing these services and 
     Medicare beneficiaries are precluded from utilizing marriage 
     and family therapists to provide mental health counseling and 
     treatment.
       Marriage and family therapists are considered one of the 
     five ``core mental health professions'' recognized by the 
     federal government. Unfortunately, however, we are the only 
     core mental health profession not recognized by Medicare.
       We appreciate and thank you for you willingness to take on 
     the challenge of sponsoring legislation to make LMFTs and 
     LPCs eligible for reimbursement by Medicare.
           Sincerely,
                                                   Mary Riemersma,
     Executive Director.
                                  ____

                                         California Association of


                               Marriage and Family Therapists,

                                 San Diego, CA, November 19, 2001.
     Re Medicare Legislation to Recognize Marriage and Family 
         Therapists and Professional Counselors.
     Hon. Blanche Lincoln,
     U.S. Senate,
     Washington, DC.

       Dear Senator Lincoln: We are writing to you in recognition 
     and support of your willingness to cosponsor legislation that 
     would dramatically improve access to mental health services 
     for Medicare beneficiaries. By adding licensed marriage and 
     family therapists and licensed professional counselors, it 
     will open many opportunities within Medicare for patients to 
     locate and receive therapy from appropriately trained and 
     qualified professionals.
       On behalf of the 24,500 members of the California 
     Association of Marriage and Family Therapists, we support 
     your willingness to co-sponsor this legislation. Under 
     California law, licensed marriage and family therapists are 
     legally authorized to provide mental health services and are 
     reimbursed by most all third party payers for the diagnosis 
     and treatment of mental disorders. However, because Medicare 
     does not recognize this particular discipline, California 
     licensed marriage and family therapists are precluded from 
     providing these services and Medicare beneficiaries are 
     precluded from utilizing marriage and family therapists to 
     provide mental health counseling and treatment.
       Marriage and family therapists are considered one of the 
     five ``core mental health professions'' recognized by the 
     federal government. Unfortunately, however, we are the only 
     core mental health profession not recognized by Medicare.
       We appreciate and thank you for you willingness to take on 
     the challenge of sponsoring legislation to make LMFTs and 
     LPCs eligible for reimbursement by Medicare.
           Sincerely,
                                                   Mary Riemersma,
                                               Executive Director.

  Mrs. LINCOLN. Mr. President, I am pleased to join my colleague 
Senator Thomas today in introducing the Seniors Mental Health Access 
Improvement Act of 2001.
  This bill would expand Medicare coverage to licensed professional 
counselors and licensed marriage and family therapists. One result of 
this expanded coverage will be to increase seniors' access to mental 
health services, especially in rural and underserved areas.
  Licensed professional counselors and marriage and family therapists 
are currently excluded from Medicare coverage even though they meet the 
same education, training, and examination requirements that clinical 
social workers do. The only difference is that clinical social workers 
have been covered under Medicare for over a decade.
  Why do we need this legislation? The mental health needs of older 
Americans are not being met. Although the rate of suicide among older 
Americans is higher than for any other age group, less than three 
percent of older Americans report seeing mental health professionals 
for treatment. And going to their primary care physician is simply not 
enough. Research shows that most primary care providers receive 
inadequate mental health training, particularly in geriatrics.
  Lack of access to mental health providers is one of the primary 
reasons why older Americans don't get the mental health treatment they 
need. Not surprisingly, this problem is exacerbated in rural and 
underserved areas.
  Licensed professional counselors are often the only mental health 
specialists available in rural and underserved communities. This is 
true in my home State of Arkansas, where 91 percent of Arkansans reside 
in a mental health professional shortage area.
  Since there are more licensed professional counselors practicing in 
my State than any other mental health professional, this legislation 
will significantly increase the number of Medicare--eligible mental 
health providers in Arkansas. Licensed professional counselors are 
already serving patients who have private insurance or Medicaid. It is 
time for Medicare patients to also have access to these professionals.
  The bill we are introducing today is an important first step in 
expanding access to good mental health. By including licensed 
professional counselors and licensed marriage and family therapists 
among the list of providers who deliver mental health services to 
Medicare beneficiaries, we will help ensure that all seniors, no matter 
where they live, have the opportunity to receive mental health 
treatment.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Campbell, and Mr. Bingaman):
  S. 1761. A bill to amend title XVII of the Social Security Act to 
provide for coverage of cholesterol and blood lipid screening under the 
Medicare Program; to the Committee on Finance.
  Mr. DORGAN. Mr. President, today I am introducing the Medicare 
Cholesterol Screening Coverage Act of 2001, along with my colleagues 
Mr. Campbell and Mr. Bingaman. This bipartisan legislation, which also 
has been introduced in the House of Representatives, would add blood 
cholesterol screening as a covered benefit for Medicare beneficiaries.
  The most recent guidelines from the National Heart, Lung and Blood 
Institute recommends that all Americans over the age of 20 be screened 
for high cholesterol. Yet current Medicare policy only covers 
cholesterol testing for patients who already have heart disease, stroke 
or other disorders associated with elevated cholesterol levels. Thus, 
enactment of this bill will help save lives of the approximately one-
third of Medicare recipients not already covered for cholesterol 
testing.
  High cholesterol is a major risk factor for heart disease and stroke, 
the Nation's number 1 and number 3 killers of both men and women. 
Cardiovascular disease kills nearly a million people each year in this 
country, more than the next seven leading causes of death combined. In 
particular, Americans over the age of 65 have the highest rate of 
coronary heart disease, CHD, in the Nation and about 80 percent of the 
deaths from CHD occur in this age group. It is not surprising that 
cardiovascular diseases account for one-third of all Medicare's 
spending for hospitalizations.
  Obviously, in order to slow the onset of CHD, it is first necessary 
to identify those with elevated cholesterol, which is why passage of 
this bill is so critical. The importance of identifying those at risk 
for CHD is illustrated by the results of just released research from 
Oxford University. This study showed that in elderly people, lowering 
of cholesterol was associated with a one-third reduction in heart 
attack and stroke and a substantially reduced need for surgery to 
repair or open clogged arteries.
  Clearly, this bill can save lives. Yet despite the importance of 
identifying this major, changeable risk factor for cardiovascular 
disease, screening for cholesterol is not covered by Medicare. I have 
felt for a long while that our health care system, and Medicare in 
particular, needs to place a greater emphasis on preventative health 
care. Implementation of the measures in this bill can potentially 
decrease the incidence of cardiovascular disease resulting in reduced 
illness, debilitation and death. Early detection of illness is often an 
important factor in successful treatment and has been effective in 
reducing long-term health care costs.
  Previously, Congress in its wisdom, has acted to provide for other 
screening tests including bone mass measurement, and screenings for 
glaucoma and for colorectal, prostate and breast cancer. Now we must 
take another step in the right direction by extending Medicare coverage 
for cholesterol screening.

[[Page 23793]]

  It is only right that the Congress do what it can to help implement 
the guidelines of the National Heart, Lung and Blood Institute, and it 
is only right that we provide these benefits for all Medicare 
recipients. I urge my Senate colleagues to join me in cosponsoring this 
piece of legislation. I ask unanimous consent that the text of the bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1761

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Cholesterol 
     Screening Coverage Act of 2001''.

     SEC. 2. MEDICARE COVERAGE OF CHOLESTEROL AND BLOOD LIPID 
                   SCREENING.

       (a) In General.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) is amended--
       (1) in subsection (s)(2)--
       (A) by striking ``and'' at the end of subparagraph (U);
       (B) by adding ``and'' at the end of subparagraph (V); and
       (C) by adding at the end the following new subparagraph:
       ``(W) cholesterol and other blood lipid screening tests (as 
     defined in subsection (ww)(1));''; and
       (2) by adding at the end the following new subsection:

           ``Cholesterol and Other Blood Lipid Screening Test

       ``(ww)(1) The term `cholesterol and other blood lipid 
     screening test' means diagnostic testing of cholesterol and 
     other lipid levels of the blood for the purpose of early 
     detection of abnormal cholesterol and other lipid levels.
       ``(2) The Secretary shall establish standards, in 
     consultation with appropriate organizations, regarding the 
     frequency and type of cholesterol and other blood lipid 
     screening tests for individuals who do not otherwise qualify 
     for coverage for cholesterol and other blood lipid testing 
     based on established clinical diagnoses.''.
       (b) Frequency.--Section 1862(a)(1) of such Act (42 U.S.C. 
     1395y(a)(1)) is amended--
       (1) by striking ``and'' at the end of subparagraph (H);
       (2) by striking the semicolon at the end of subparagraph 
     (I) and inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(J) in the case of a cholesterol and other blood lipid 
     screening test (as defined in section 1861(ww)(1)), which is 
     performed more frequently than is covered under section 
     1861(ww)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to tests furnished on or after January 1, 2003.
                                 ______
                                 
      By Mr. DASCHLE (for himself and Mr. Johnson):
  S. 1763. A bill to promote rural safety and improve rural law 
enforcement; to the Committee on Finance.
  Mr. DASCHLE. Mr. President, in the weeks since September 11, we've 
heard a lot about homeland security. Right now, we're working to make 
our Nation's infrastructure more secure, our food and water supply 
safer, and to improve our government's ability to respond to chemical 
and biological weapons attacks.
  To me, homeland security also means giving all of our Nation's law 
enforcement officers the tools and training they need to do their jobs. 
And that means recognizing that law enforcement in rural America has 
its own unique set of challenges: rural law enforcement officers patrol 
larger areas, and operate under tighter budgets with smaller staffs, 
than most of their urban and suburban counterparts.
  In States like South Dakota, often, just a handful of people are 
responsible for patrolling an entire county. Law enforcement officers 
respond to a lot of calls alone, and often have to communicate with 
each other by cell phone. Backup can be several hours away. Yet we 
expect the same quality of service, and we demand lower crime rates.
  I believe Washington can and must do a better job of helping rural 
law enforcement do their work. That is why I am proud to join my 
colleague and friend, Senator Tim Johnson, in introducing the Rural 
Safety Act of 2001.
  While Tim and I are the ones introducing this bill, we want to thank 
all of the South Dakota sheriffs with whom we've spoken whose ideas and 
experiences are incorporated within it. For my part, I'd like to 
recognize: Sheriff Mike Milstead of Minnehaha County, Sheriff Mark 
Milbrandt of Brown County, Sheriff Leidholt of Hughes County, Chief Al 
Aden of Pierre, Chief Duane Heeney of Yankton, Chief Ken Schwab of my 
hometown, Aberdeen, Chief Doug Feltman of Mitchell; and Chief Craig 
Tieszen of Rapid City.
  One theme I've heard repeated on visit after visit is this: 
Washington needs to do a better job working with State and local law 
enforcement agencies. To me, that means building on what we know works, 
and developing new initiatives that respond to the special law 
enforcement challenges of small towns and rural communities. To that 
end, this bill does six things: First, it builds on our success with 
the COPS program. COPS has enabled South Dakota communities to hire 
more than 300 law enforcement officers. Across the country, it's added 
more than 100,000 new officers to the ``thin blue line.'' Under this 
proposal, rural communities that hire officers through the COPS program 
will be eligible for federal funding to keep those offices on for a 
fourth year.
  Second, because rural law enforcement officers have to cover such 
large areas, rural law enforcement agencies arguably have a greater 
need for advanced communications equipment than many urban and suburban 
departments, but have fewer resources to purchase them. Recently, I 
received a letter from Sgt. Marty Goetsch in the Lawrence County 
Sheriff's Office in Deadwood, SD. He told me that his office, and its 
staff of 11, are ``very much behind in the available technology.'' This 
bill provides funds to help rural communities obtain things like mobile 
data computers and dash-mounted video cameras. It will also provide 
additional funds for training to use new technologies.
  Third, this bill will establish a Rural Policing Institute as a way 
to help rural law enforcement officers upgrade their skills and 
tactics.
  Fourth, it will expand and improve the 9-1-1 emergency assistance 
systems in rural areas. Many of us take for granted that in an 
emergency, we can call 9-1-1, and help will be there. In rural and 
remote areas, the nearest help may be miles away. We need to make sure 
that people in rural areas can rely on a modern, integrated system of 
communication between law enforcement, and fire and other safety 
officials. The Rural Safety Act will provide the resources to finish 
the job and develop a seamless 9-1-1 system all across America.
  Fifth, the bill will help communities create ``restorative justice'' 
for first-time, non-violent juvenile offenders. These programs offer 
victims the opportunity to confront youthful offenders and require that 
these offenders make meaningful restitution to their victims. In many 
cases, that will meet our societal goals more effectively and more 
efficiently that costly incarceration.
  Sixth, it will enable us to stop the spread of ``meth'' now, before 
it becomes a crisis. A study released last year by the Center on 
Addiction and Substance Abuse at Columbia University shows that eighth 
graders living in rural communities are 104 percent more likely to have 
used amphetamines, including methamphetamine. We need to stop the use 
of all of these drugs, but in rural America, meth is particularly 
addictive, and devastatingly destructive. This proposal will increase 
prevention and treatment of meth use, and cleanup of meth labs that 
have been discovered and shut down.
  Seventh and finally, our plan will offer gun owners tax credits to 
purchase gun safes. It will also provide law enforcement agencies with 
resources to buy and install gun safes or gun storage racks for 
officers' homes. I don't believe Washington should restrict the right 
of law-abiding citizens to own guns. But if gun owners want help in 
preventing accidental gun tragedies, I believe Washington can, and 
should, help.
  When we talk about homeland security, I believe we need to think 
about the law enforcement needs of those who live in America's rural 
areas. That is what this bill does, and that is why I encourage all of 
my colleagues to support it.

[[Page 23794]]


                                 ______
                                 
      By Mr. LIEBERMAN:
  S. 1764. A bill to provide incentives to increase research by 
commercial, for-profit entities to develop vaccines, microbicides, 
diagnostic technologies, and other drugs to prevent and treat illnesses 
associated with a biological or chemical weapons attack; to the 
Committee on Finance.
  Mr. LIEBERMAN. Mr. President, America has a major flaw in its 
defenses against bioterrorism. Recent hearings I chaired in the 
Government Affairs Committee on bioterrorism demonstrated that America 
has not made a national commitment to research and development of 
treatments and cures for those who might be exposed to or infected by a 
biological agent or chemical toxin. Correcting this critical gap is the 
purpose of legislation I am introducing today.
  Obviously, our first priority must be to attempt to prevent the use 
of these agents and toxins by terrorists, quickly assess when an attack 
has occurred, take appropriate public health steps to contain the 
exposure, stop the spread of contagion, and then detoxify the site. 
These are all critical functions, but in the end we must recognize that 
some individuals may be exposed or infected. Then the critical issue is 
whether we can treat and cure them and prevent death and disability.
  We need a diversified portfolio of medicines. In cases where we have 
ample advance warning of an attack and specific information about the 
agent or toxin, we may be able to vaccinate the vulnerable population 
in advance. In other cases, even if we have a vaccine, we might well 
prefer to use medicines that would quickly stop the progression of the 
disease or the toxic effects. We also need a powerful capacity quickly 
to develop new countermeasures where we face a new agent or toxin.
  Unfortunately, we are woefully short of vaccines and medicines to 
treat individuals who are exposed or infected. We have antibiotics that 
seem to work for most of those infected in the current anthrax attack, 
but these have not prevented five deaths. We have no effective vaccines 
or medicines for most other biological agents and chemical toxins we 
might confront. In some cases we have vaccines to prevent, but no 
medicines to treat, an agent. We have limited capacity to speed the 
development of vaccines and medicines to prevent or treat novel agents 
and toxins not currently known to us.
  We have provided, and should continue to provide, direct Federal 
funding for research and development of new medicines, however, this 
funding is unlikely to be sufficient. Even with ample Federal funding, 
many private companies will be reluctant to enter into agreements with 
government agencies to conduct this research. Other companies would be 
willing to conduct the research with their own capital and at their own 
risk but are not able to secure the funding from investors.
  The legislation I introduce today would provide incentives for 
private biotechnology companies to form capital to develop 
countermeasures, medicines, to prevent, treat and cure victims of 
bioterror attacks. This will enable this industry to become a vital 
part of the national defense infrastructure and do so for business 
reasons that make sense for their investors on the bottom line.
  Enactment of these incentives is necessary as most biotech companies 
have no approved products or revenue from product sales to fund 
research. They rely on investors and equity capital markets to fund the 
research. They must necessarily focus on research that will lead to 
product sales and revenue and, thus, to an end to their dependence on 
investor capital. There is no established or predictable market for 
countermeasures. Investors are justifiably reluctant to fund this 
research, which will present challenges similar in complexity to AIDS. 
Investors need assurances that research on countermeasures has the 
potential to provide a rate of return commensurate with the risk, 
complexity and cost of the research, a rate of return comparable to 
that which may arise from a treatment for cancer, MS, Cystic Fibrosis 
and other major diseases.
  It is in our national interest to enlist these companies in the 
development of countermeasures as biotech companies tend to be 
innovative and nimble and intently focused on the intractable diseases 
for which no effective medical treatments are available.
  The incentives I have proposed are innovative and some may be 
controversial. I invite everyone who has an interest and a stake in 
this research to enter into a dialogue about the issue and about the 
nature and terms of the appropriate incentives. I have attempted to 
anticipate the many complicated technical and policy issues that this 
legislation raises. The key focus of our debate should be how, not 
whether, we address this critical gap in our public health 
infrastructure and the role that the private sector should play. 
Millions of Americans will be at risk if we fail to enact legislation 
to meet this need.
  My proposal is complimentary to legislation on bioterrorism 
preparedness sponsored by Senators Frist and Kennedy. Their bill, the 
Bioweapons Preparedness Act of 2001, S. 1715, focuses on many needed 
improvements in our public health infrastructure. It builds on their 
proposal in the 106th Congress, S. 2731, and H.R. 4961, sponsored by 
Congressman Richard Burr.
  Among the provisions in these bills are initiatives on improving 
bioterrorism preparedness capacities, improving communication about 
bioterrorism, protection of children, protection of food safety, and 
global pathogen surveillance and response. The Senate Appropriations 
Committee reported legislation to appropriate the funds for the 
purposes authorized in the Frist-Kennedy proposal and that was 
incorporated in the stimulus package pending in the Senate before the 
Thanksgiving recess.
  Title IV of their bill includes provisions to expand research on 
biological agents and toxins, as well as new treatments and vaccines 
for such agents and toxins. Since the effectiveness of vaccines, drugs, 
and therapeutics for many biological agents and toxins often may not 
ethically be tested in humans, the bill ensures that the Food and Drug 
Administration, FDA, will finalize by a date certain its rule regarding 
the approval of new countermeasures on the basis of animal data. 
Priority countermeasures will also be given enhanced consideration for 
expedited review by the FDA. They rely on the authority, through an 
existing Executive Order, to ensure indemnification of sponsors who 
supply vaccines to the Government. And the bill provides a limited 
antitrust exemption to allow potential sponsors to discuss and agree 
upon how to develop, manufacture, and produce new countermeasures, 
including vaccines, and drugs. Federal Trade Commission and the 
Department of Justice approval of such agreements is required to ensure 
such agreements are not anti-competitive.
  My legislation builds on these provisions by providing incentives to 
enable the biotechnology industry acting on its own initiative to fund 
and conduct research on countermeasures. It includes tax, procurement, 
intellectual property and liability incentives. Accordingly, my 
proposal raises issues falling within the jurisdiction of the HELP, 
Finance, and Judiciary Committees.
  The Frist-Kennedy bill and my bill are complimentary. We do need to 
conform the two bills to one another on some issues: the bills have 
different definitions of the term ``countermeasure,'' my bill gives the 
Director of Homeland Defense authority over the countermeasure list 
whereas the Secretary of Health and Human Services would have authority 
under Frist/Kennedy, and my bill establishes a ``purchase fund'' and 
Frist-Kennedy is a ``stockpile.'' The best, most comprehensive approach 
would be to meld the two bills together.
  The bottom line is that we need both bills, one focusing on public 
health and one focusing on medical research. Without medical research, 
public health workers will not have the single most important tool to 
use in an attack, medicine to prevent death and disability and medicine 
that will help us avoid public panic.

[[Page 23795]]

  We are fortunate that we have broad-spectrum antibiotics including 
Cipro to treat the type of anthrax to which so many have been exposed. 
This treatment seems to be effective before the anthrax symptoms become 
manifest, and effective to treat cutaneous anthrax, and we have been 
able to effectively treat some individuals who have inhalation anthrax. 
I am thankful that this drug exists to treat those who have been 
exposed, including my own Senate staff. Our offices are immediately 
above those of Senator Daschle.
  We have seen how reassuring it is that we have an effective treatment 
for this biological agent. We see long lines of Congressional staffers 
and postal workers awaiting their Cipro. Think what it would be like if 
we could only say, ``We have nothing to treat you and hope you don't 
contract the disease.'' Think of the public panic that we might see.
  I am grateful that this product exists and proud of the fact that the 
Bayer Company is based in Connecticut. The last thing we should be 
doing is criticizing this company for their research success. The 
company has dispensed millions of dollars worth of Cipro free of 
charge. Criticizing it for the price that it charges tells other 
research companies that the more valuable their products are in 
protecting the public health, the more likely they are to be criticized 
and bullied.
  It is fortuitous that Cipro seems to be effective against anthrax. 
The product was not developed with this use in mind. My point with this 
legislation is we cannot rely on good fortune and chance in the 
development of countermeasures. We need to make sure that these 
countermeasures will be developed. We need more companies like Bayer, 
we need them focused specifically on developing medicines to deal with 
the new bioterror threat, and we need to tell them that there are good 
business reasons for this focus.
  We also are fortunate to have an FDA-licensed vaccine, made by 
BioPort Corporation, that is recommended by our country's medical 
experts at the DOD and CDC for pre-anthrax exposure vaccination of 
individuals in the military and some individuals in certain laboratory 
and other occupational settings where there is a high risk of exposure 
to anthrax. This vaccine is also recommended for use with Cipro after 
exposure to anthrax to give optimal and long-lasting protection. That 
vaccine is not now available for use. We must do everything necessary 
to make this and other vaccines available in adequate quantities to 
protect against future attacks. But the point of this legislation is 
that we need many more Cipro-like and antrax vaccine-like products. 
That we have these products is the good news; that we have so few 
others is the problem.
  One unfortunate truth in this debate is that we cannot rely upon 
international legal norms and treaties alone to protect our citizens 
from the threat of biological or chemical attack.
  The United States ratified the Biological and Toxin Weapons 
Convention, BWC, on January 22, 1975. That Convention now counts 144 
nations as parties. Twenty-two years later, on April 24, 1997, the 
United States Senate joined 74 other countries when it ratified the 
Chemical Weapons Convention, CWC. While these Conventions serve 
important purposes, they do not in any way guarantee our safety in a 
world with rogue states and terrorist organizations.
  The effectiveness of both Conventions is constrained by the fact that 
many countries have failed to sign on to either of them. Furthermore, 
two signatories of the BWC, Iran and Iraq, are among the seven 
governments that the Secretary of State has designated as state 
sponsors of international terrorism, and we know for a fact that they 
have both pursued clandestine biological weapons programs. The BWC, 
unlike the CWC, has no teeth, it does not include any provisions for 
verification or enforcement. Since we clearly cannot assume that any 
country that signs on to the Convention does so in good faith, the 
Convention's protective value is limited.
  On November 1 of this year, the President announced his intent to 
strengthen the BWC as part of his comprehensive strategy for combating 
terrorism. A BWC review conference, held every 5 years to consider ways 
of improving the Convention's effectiveness, will convene in Geneva 
beginning November 19. In anticipation of that meeting, the President 
has urged that all parties to the Convention enact strict national 
criminal legislation to crack down on prohibited biological weapons 
activities, and he has called for an effective United Nations procedure 
for investigating suspicious outbreaks of disease or allegations of 
biological weapons use.
  These steps are welcomed, but they are small. Even sweeping reforms, 
like creating a more stringent verification and enforcement regime, 
would not guarantee our safety. The robust verification and enforcement 
mechanisms in the CWC, for instance, have proven to be imperfect, and 
scientists agree that it is much easier to conceal the production of 
biological agents than chemical weapons.
  The inescapable fact, therefore, is that we cannot count on 
international regimes to prevent those who wish us ill from acquiring 
biological and chemical weapons. We must be prepared for the reality 
that these weapons could fall into the hands of terrorists, and could 
be used against Americans on American soil. And we must be prepared to 
treat the victims of such an attack if it were ever to occur.
  On November 26, the Centers for Disease Control issued its interim 
working draft plan for responding to an outbreak of smallpox. The plan 
does not call for mass vaccination in advance of a smallpox outbreak 
because the risk of side effects from the vaccine outweighs the risks 
of someone actually being exposed to the smallpox virus. At the heart 
of the plan is a strategy sometimes called ``search and containment.''
  This strategy involves identifying infected individual or individuals 
with confirmed smallpox, identifying and locating those people who come 
in contact with that person, and vaccinating those people in outward 
rings of contact. The goal is to produce a buffer of immune individuals 
and was shown to prevent smallpox and to ultimately eradicate the 
outbreak. Priorities would be set on who is vaccinated, perhaps 
focusing on the outward rings before those at the center of the 
outbreak. The plan assumes that the smallpox vaccination is effective 
for persons who have been exposed to the disease as long as the disease 
has not taken hold.
  In practice it may be necessary to set a wide perimeter for these 
areas because smallpox is highly contagious before it might be 
diagnosed. There may be many areas subject to search and containment 
because people in our society travel frequently and widely. Terrorists 
might trigger attacks in a wide range of locations to multiply the 
confusion and panic. The most common form of smallpox has a 30-percent 
mortality rate, but terrorists might be able to obtain supplies of 
``flat-type'' smallpox with a mortality rate of 96 percent and 
hemorrhagic-type smallpox, which is almost always fatal. For these 
reasons, the CDC plan accepts the possibility that whole cities or 
other geographic areas could be cordoned off, letting no one in or out, 
a quarantine enforced by police or troops.
  The plan focuses on enforcement authority through police or National 
Guard, isolation and quarantine, mandatory medical examinations, and 
rationing of medicines. It includes a discussion of ``population-wide 
quarantine measures which restrict activities or limit movement of 
individuals [including] suspension of large public gatherings, closing 
of public places, restriction on travel [air, rail, water, motor 
vehicle, and pedestrian], and/or `cordon sanitaire' [literally a 
`sanitary cord' or line around a quarantined area guarded to prevent 
spread of disease by restricting passage into or out of the area].'' 
The CDC recommends that States update their laws to provide authority 
for ``enforcing quarantine measures'' and it recommends that States in 
``pre-event planning'' identify ``personnel who can enforce these 
isolation and quarantine measures, if necessary.'' Guide C, Isolation 
and Quarantine, page 17.

[[Page 23796]]

  On October 23, 2001, the CDC published a ``Model State Emergency 
Health Powers Act.'' It was prepared by the Center for Law and the 
Public's Health at Georgetown and Johns Hopkins Universities, in 
conjunction with the National Governors Association, National 
Conference of State Legislatures, Association of State and Territorial 
Health Officials, National Association of City and County Health 
Officers, and National Association of Attorneys General. A copy of the 
model law is printed at www.publichealthlaw.net. The law would provide 
powers to enforce the ``compulsory physical separation, including the 
restriction of movement or confinement, of individuals and/or groups 
believed to have been exposed to or known to have been infected with a 
contagious disease from individuals who are believed not to have been 
exposed or infected, in order to prevent or limit the transmission of 
the disease to others.'' Federal law on this subject is very strong and 
the Administration can always rely on the President's Constitution 
authority as Commander in Chief.
  Let us try to imagine, however, what it would be like if a quarantine 
is imposed. Let us assume that there is not enough smallpox vaccine 
available for use in a large outbreak, that the priority is to 
vaccinate those in the outward rings of the containment area first, 
that the available vaccines cannot be quickly deployed inside the 
quarantined area, that it is not possible to quickly trace and identify 
all of the individuals who might have been exposed, and/or that public 
health workers themselves might be infected. We know that there is no 
medicine to treat those who do become infected. We know the mortality 
rates. It is not hard to imagine how much force might be necessary to 
enforce the quarantine. It would be quite unacceptable to permit 
individuals to leave the quarantined area no matter how much panic had 
taken hold.
  Think about how different this scenario would be if we had medicines 
that could effectively treat and cure those who become infected by 
smallpox. We still might implement the CDC plan but a major element of 
the strategy would be to persuade people to visit their local clinic or 
hospital to be dispensed their supply of medicine. We could trust that 
there would be a very high degree of voluntary compliance. This would 
give us more time, give us options if the containment is not 
successful, give us options to treat those in the containment area who 
are infected, and enable us to quell the public panic.
  Because we have no medicine to treat those infected by smallpox, we 
have to be prepared to implement a plan like the one CDC has proposed. 
Theirs is the only option because our options are so limited. We need 
to expand our range of options.
  We should not be lulled by the apparent successes with Cipro and the 
strains of anthrax we have seen in the recent attacks. We have not been 
able to prevent death in some of the patients with late-stage 
inhalation anthrax and Robert Stevens, Thomas Morris Jr., Joseph 
Curseen, Kathy Nguyen, and Ottilie Lundgren have died. This legislation 
is named in honor of them. What we needed for them, and did not have, 
is a drug or vaccine that would treat late stage inhalation anthrax.
  As I have said, we need an effective treatment for those who become 
infected with smallpox. We have a vaccine that effectively prevents 
smallpox infection, and administering this vaccine within four days of 
first exposure has been shown to offer some protections against 
acquiring infection and significant protection against a fatal outcome. 
The problem is that administering the vaccine in this time frame to all 
those who might have been exposed may be exceedingly difficult. And 
once infection has occurred, we have no effective treatment options.
  In the last century 500 million people have died of smallpox, more 
than have from any other infectious diseases, as compared to 320 
million deaths in all the wars of the twentieth century. Smallpox was 
one of the diseases that nearly wiped out the entire Native American 
population in this hemisphere. The last naturally acquired case of 
smallpox occurred in Somalia in 1977 and the last case from laboratory 
exposure was in 1978.
  Smallpox is a nasty pathogen, carried in microscopic airborne 
droplets inhaled by its victims. The first signs are headache, fever, 
nausea and backache, sometimes convulsions and delirium. Soon, the skin 
turns scarlet. When the fever lets up, the telltale rash appears, flat 
red spots that turn into pimples, then big yellow pustules, then scabs. 
Smallpox also affects the throat and eyes, and inflames the heart, 
lungs, liver, intestines and other internal organs. Death often came 
from internal bleeding, or from the organs simply being overwhelmed by 
the virus. Survivors were left covered with pockmarks, if they were 
lucky. The unlucky ones were left blind, their eyes permanently clouded 
over. Nearly one in four victims died. The infection rate is estimated 
to be 25-40 percent for those who are unvaccinated and a single case 
can cause 20 or more additional infections.
  During the 16th Century, 3.5 million Aztecs, more than half the 
population, died of smallpox during a 2-year span after the Spanish 
army brought the disease to Mexico. Two centuries later, the virus 
ravaged George Washington's troops at Valley Forge. And it cut a deadly 
path through the Crow, Dakota, Sioux, Blackfoot, Apache, Comanche and 
other American Indian tribes, helping to clear the way for white 
settlers to lay claim to the western plains. The epidemics began to 
subside with one of medicine's most famous discoveries: the finding by 
British physician Edward Jenner in 1796 that English milkmaids who were 
exposed to cowpox, a mild second cousin to smallpox that afflicts 
cattle, seemed to be protected against the more deadly disease. 
Jenner's work led to the development of the first vaccine in Western 
medicine. While later vaccines used either a killed or inactivated form 
of the virus they were intended to combat, the smallpox vaccine worked 
in a different way. It relied on a separate, albeit related virus: 
first cowpox and the vaccinia, a virus of mysterious origins that is 
believed to be a cowpox derivative. The last American was vaccinated 
back in the 1970s and half of the U.S. population has never been 
vaccinated. It is not known how long these vaccines provide protection, 
but it is estimated that the term is 3-5 years.
  In an elaborate smallpox biowarfare scenario enacted in February 1999 
by the Johns Hopkins Center for Civilian Biodefense Studies, it was 
projected that within 2 months 15,000 people had died, epidemics were 
out of control in fourteen countries, all supplies of smallpox vaccine 
were depleted, the global economy was on the verge of collapse, and 
military control and quarantines were in place. Within twelve months it 
was projected that eighty million people worldwide had died.
  A single case of smallpox today would become a global public health 
threat and it has been estimated that a single smallpox bioterror 
attack on a single American city would necessitate the vaccination of 
30-40 million people.
  The U.S. Government is now in the process of purchasing substantial 
stocks of the smallpox vaccine. We then face a very difficult decision 
on deploying the vaccine. We know that some individuals will have an 
adverse reaction to this vaccine. No one in the United States has been 
vaccinated against smallpox in 25 years. Those that were vaccinated 
back then may not be protected against the disease today. If we had an 
effective treatment for those who might become infected by smallpox, we 
would face much less pressure regarding deploying the vaccine. If we 
face a smallpox epidemic from a bioterrorism attack, we will have no 
Cipro to reassure the public and we will be facing a highly contagious 
disease and epidemic. To be blunt, it will make the current anthrax 
attack look benign by comparison.
  Smallpox is not the only threat. We have seen other epidemics in this 
century. The 1918 influenza epidemic provides a sobering admonition 
about the need for research to develop medicines.

[[Page 23797]]

In 2 years, a fifth of the world's population was infected. In the 
United States the 1918 epidemic killed more than 650,000 people in a 
short period of time and left 20 million seriously ill, one-fourth of 
the entire population. The average lifespan in the U.S. was depressed 
by ten years. In just 1 year, the epidemic killed 21 million human 
beings worldwide--well over twice the number of combat deaths in the 
whole of World War I. The flu was exceptionally virulent to begin with 
and it then underwent several sudden and dramatic mutations in its 
structure. Such mutations can turn flu into a killer because its 
victims' immune systems have no antibodies to fight off the altered 
virus. Fatal pneumonia can rapidly develop.
  Another deadly toxin, ricin toxin, was of interest to the al-Qaeda 
terrorist network. At an al-Qaeda safehouse in Saraq Panza, Kabul 
reporters found instructions for making ricin. The instructions make 
chilling reading. ``A certain amount, equal to a strong dose, will be 
able to kill an adult, and a dose equal to seven seeds will kill a 
child,'' one page reads. Another page says: ``Gloves and face mask are 
essential for the preparation of ricin. Period of death varies from 3-5 
days minimum, 4-14 days maximum.'' The instructions listed the symptoms 
of ricin as vomiting, stomach cramps, extreme thirst, bloody diarrhoea, 
throat irritation, respiratory collapse and death.
  No specific treatment or vaccine for ricin toxin exists. Ricin is 
produced easily and inexpensively, highly toxic, and stable in 
aerosolized form. A large amount of ricin is necessary to infect whole 
populations, the amount of ricin necessary to cover a 100-km \2\ area 
and cause 50 percent lethality, assuming aerosol toxicity of 3 mcg/kg 
and optimum dispersal conditions, is approximately 4 metric tons, 
whereas only 1 kg of Bacillus anthracis is required. But it can be used 
to terrorize a large population with great effect because it is so 
lethal.
  Use of ricin as a terror weapon is not theoretical. In 1991 in 
Minnesota, 4 members of the Patriots Council, an extremist group that 
held antigovernment and antitax ideals and advocated the overthrow of 
the U.S. Government, were arrested for plotting to kill a U.S. marshal 
with ricin. The ricin was produced in a home laboratory. They planned 
to mix the ricin with the solvent dimethyl sulfoxide, DMSO, and then 
smear it on the door handles of the marshal's vehicle. The plan was 
discovered, and the 4 men were convicted. In 1995, a man entered Canada 
from Alaska on his way to North Carolina. Canadian custom officials 
stopped the man and found him in possession of several guns, $98,000, 
and a container of white powder, which was identified as ricin. In 
1997, a man shot his stepson in the face. Investigators discovered a 
makeshift laboratory in his basement and found agents such as ricin and 
nicotine sulfate. And, ricin was used by the Bulgarian secret police 
when they killed Georgi Markov by stabbing him with a poison umbrella 
as he crossed Waterloo Bridge in 1978.
  Going beyond smallpox, influenza, and ricin, we do not have an 
effective vaccine or treatment for dozens of other deadly and disabling 
agents and toxins. Here is a partial list of some of the other 
biological agents and chemical toxins for which we have no effective 
treatments: clostridium botulinum toxin, botulism; francisella 
tularensis, tularaemia; Ebola hemorrhagic fever, Marbug hemorrhagic 
fever, Lassa fever, Julin, Argentine hemorrhagic fever; Coxiella 
burnetti, Q fever; brucella species, brucellosis; burkholderia mallei, 
glanders; Venezuelan encephalomyelitis, eastern and western equine 
encephalomyelitis, epsilon toxin of clostridium perfringens, 
staphylococcus entretoxin B, salmonella species, shigella dysenteriae, 
escherichia coli O157:H7, vibrio cholerae, cryptosporidium parvum, 
nipah virus, hantaviruses, tickborne hemorrhagic fever viruses, 
tickborne encephalitis virus, yellow fever, nerve agents, tabun, sarin, 
soman, GF, and VX; blood agents, hydrogen cyanide and cyanogens 
chloride; blister agents, lewisite, nitrogenadn sulfur mustards, and 
phosgene oxime; heavy metals, arsenic, lead, and mercury; and volatile 
toxins, benzene, chloroform, trihalomethanes; pulmonary agents, 
Phosgene, chlorine, vinly chloride; and incapacitating agents, BZ.
  The naturally occurring forms of these agents and toxins are enough 
to cause concern, but we also know that during the 1980s and 1990s the 
Soviet Union conducted bioweapons research at 47 laboratories and 
testing sites, employed nearly 50,000 scientists in the work, and that 
they developed genetically modified versions of some of these agents 
and toxins. The goal was to develop an agent or toxin that was 
particularly virulent or not vulnerable to available antibiotics.
  The United States has publicly stated that five countries are 
developing biological weapons in violation of the Biological Weapons 
convention, North Korea, Iraq, Iran, Syria, and Libya, and stated that 
additional countries not yet named, possibly including Russia, China, 
Israel, Sudan and Egypt, are also doing so as well.
  What is so insidious about biological weapons is that in many cases 
the symptoms resulting from a biological weapons attack would likely 
take time to develop, so an act of bioterrorism may go undetected for 
days or weeks. Affected individuals would seek medical attention not 
from special emergency response teams but in a variety of civilian 
settings at scattered locations. This means we will need medicines that 
can treat a late stage of the disease, long after the infection has 
taken hold.
  We must recognize that the distinctive characteristic of biological 
weapons is that they are living micro-organisms and are thus the only 
weapons that can continue to proliferate without further assistance 
once released in a suitable environment.
  The lethality of these agents and toxins, and the panic they can 
cause, is quite frightening. The capacity for terror is nearly beyond 
comprehension. I do not believe it is necessary to describe the facts 
here. My point is simple: we need more than military intelligence, 
surveillance, and public health capacity. We also need effective 
medicines. We also need more powerful research tools that will enable 
us to quickly develop treatments for agents and toxins not on this or 
any other list.
  We need to do whatever it takes to be able to reassure the American 
people that hospitals and doctors have powerful medicines to treat them 
if they are exposed to biological agents or toxins, that we can contain 
an outbreak of an infectious agent, and that there is little to fear. 
To achieve this objective, we need to rely on the entrepreneurship of 
the biotechnology industry.
  There is already some direct funding of research by the Defense 
Advanced Research Projects Agency, DARPA, the National Institutes of 
Health, NIH, and the Centers for Disease Control, CDC. This research 
should go forward.
  DARPA, for instance, has been described as the Pentagon's ``venture 
capital fund,'' its mission to provide seed money for novel research 
projects that offer the potential for revolutionary findings. Last 
year, DARPA's Unconventional Pathogen Countermeasures program awarded 
contracts totalling $50 million to universities, foundations, 
pharmaceutical and biotechnology companies seeking new ways to fight 
biological agents and toxins.
  The Unconventional Pathogen Countermeasures program now funds 43 
separate research efforts on anti-bacterials, anti-toxins, anti-virals, 
decontamination, external protection from pathogens, immunization and 
multi-purpose vaccines and treatments. A common thread among many of 
these undertakings is the goal of developing drugs that provide broad-
spectrum protection against several different pathogens. This year, 
with a budget of $63 million, the program has received over 100 
research proposals in the last two months alone.
  Some of this DARPA research is directed at developing revolutionary, 
broad-spectrum, medical countermeasures against significantly 
pathogenic microorganisms and/or their pathogenic products. The goal is 
to develop countermeasures that are

[[Page 23798]]

versatile enough to eliminate biological threats, whether from natural 
sources or modified through bioengineering or other manipulation. The 
countermeasures would need the potential to provide protection both 
within the body and at the most common portals of entry, e.g., 
inhalation, ingestion, transcutaneous. The strategies might include 
defeating the pathogen's ability to enter the body, traverse the 
bloodstream or lymphatics, and enter target tissues; identifying novel 
pathogen vulnerabilities based on fundamental, critical molecular 
mechanisms of survival or pathogenesis, e.g., Type III secretion, 
cellular energetics, virulence modulation; constructing unique, robust 
vehicles for the delivery of countermeasures into or within the body; 
and modulating the advantageous and/or deleterious aspects of the 
immune response to significantly pathogenic microorganisms and/or the 
pathogenic products in the body
  While DAPRA's work is specifically aimed at protecting our military 
personnel, the National Institutes of Health also spent $49.7 million 
in the last fiscal year to find new therapies for those who contract 
smallpox and on systems for detecting the disease. In recent years, 
NIH's research programs have sought to create more rapid and accurate 
diagnostics, develop vaccines for those at risk of exposure to 
biological agents, and improve treatment for those infected. Moreover, 
in the last fiscal year, the Centers for Disease Control has allocated 
$18 million to continue research on an anthrax vaccine and $22.4 
million on smallpox research.
  Some companies are willing to enter into a research relationships 
funded by DARPA and other agencies to develop countermeasures. 
Relationships between the Government and private industry can be very 
productive, but they can also involve complex issues reflecting the 
different cultures of government and industry. Some companies, 
including some of the most entrepreneurial, might prefer to take their 
own initiative to conduct this research. Relationships with government 
entities involve risks, issues, and bureaucracy that are not present in 
relationships among biotechnology companies and between them and non-
governmental partners.
  The Defense Departments Joint Vaccine Acquisition Program, JVAP, 
illustrates the problems with a government led and managed program. A 
report in December 2000 by a panel of independent experts found that 
the current program ``is insufficient and will fail'' and recommended 
it adopt an approach more on the model of a private sector effort. It 
needs to adopt ``industry practices,'' ``capture industry interest,'' 
``implement an organizational alignment that mirrors the vaccine 
industry's short chain of command and decision making,'' ``adopt an 
industry-based management philosophy,'' and ``develop a sound 
investment strategy.'' It bemoaned the ``extremely limited'' input from 
industry in the JVAP program.
  It is clear from this experience that we should not rely exclusively 
on government funding of countermeasures research. We should take 
advantage of the entrepreneurial fervor, and the independence, of our 
biotechnology industry entrepreneurs. It is not likely that the 
Government will be willing or able to provide sufficient funding for 
the development of the countermeasures we need. Some of the most 
innovative approaches to vaccines and medicines might not be funded 
with the limited funds available to the Government. We need to provide 
incentives that will encourage every biotech company to review its 
research priorities and technology portfolio for its relevance and 
potential for countermeasure research. Some of this research is early 
stage, basic research that is being developed and considered only for 
its value in treating an entirely different disease. We need to kindle 
the imagination of biotechnology companies and their tens of thousands 
of scientists regarding countermeasures research.
  My proposal would supplement direct Federal government funding of 
research with incentives that make it possible for private companies to 
form the capital to conduct this research on their own initiative, 
utilizing their own capital, and at their own risk, all for good 
business reasons going to their bottom line.
  The U.S. biotechnology industry, approximately 1,300 companies, spent 
$13.8 billion on research last year. Only 350 of these companies have 
managed to go public. The industry employs 124,000, Ernest & Young 
data, people. The top five companies spent an average of $89,000 per 
employee on research, making it the most research-intensive industry in 
the world. The industry has 350 products in human clinical trials 
targeting more than 200 diseases. Losses for the industry were $5.8 
billion in 2001, $5.6 billion in 2000, $4.4 billion in 1999, $4.1 
billion in 1998, $4.5 billion in 1997, $4.6 billion in 1996, and 
similar amounts before that. In 2000 fully 38 percent of the public 
biotech companies had less than 2 years of funding for their research. 
Only one-quarter of the biotech companies in the United States are 
publicly traded and they tend to be the best funded.
  There is a broad range of research that could be undertaken under 
this legislation. Vaccines could be developed to prevent infection or 
treat an infection from a bioterror attack. Broad-spectrum antibiotics 
are needed. Also, promising research has been undertaken on antitoxins 
that could neutralize the toxins that are released, for example, by 
anthrax. With anthrax it is the toxins, not the bacteria itself, that 
cause death. An antitoxin could act like a decoy, attaching itself to 
sites on cells where active anthrax toxin binds and then combining with 
normal active forms of the toxin and inactivating them. An antitoxin 
could block the production of the toxin.
  We can rely on the innovativeness of the biotech industry, working in 
collaboration with academic medical centers, to explore a broad range 
of innovative approaches. This mobilizes the entire biotechnology 
industry as a vital component of our national defense against bioterror 
weapons.
  The legislation takes a comprehensive approach to the challenges the 
biotechnology industry faces in forming capital to conduct research on 
countermeasures. It includes capital formation tax incentives, 
guaranteed purchase funds, patent protections, and liability 
protections. I believe we will have to include each of these types of 
incentives to ensure that we mobilize the biotechnology industry for 
this urgent national defense research.
  I am aware that all three of the tax incentives I have proposed, and 
both of the two patent incentives I have proposed, may be 
controversial. In my view, we can debate tax or patent policy as long 
as you want, but let's not lose track of the issue here, development of 
countermeasures to treat people infected or exposed to lethal and 
disabling bioterror weapons.
  We know that incentives can spur research. In 1983 we enacted the 
Orphan Drug Act to provide incentives for companies to develop 
treatments for rare diseases with small potential markets deemed to be 
unprofitable by the industry. In the decade before this legislation was 
enacted, fewer than 10 drugs for orphan diseases were developed and 
these were mostly chance discoveries. Since the Act became law, 218 
orphan drugs have been approved and 800 more are in the pipeline. The 
Act provides 7 years of market exclusivity and a tax credit covering 
some research costs. The effectiveness of the incentives we have 
enacted for orphan disease research show us how much we can accomplish 
when we set a national priority for certain types of research.
  The incentives I have proposed differ from those set by the Orphan 
Drug Act. We need to maintain the effectiveness of the Orphan Drug Act 
and not undermine it by adding many other disease research targets. In 
addition, the tax credits for research for orphan drug research have no 
value for most biotechnology companies because few of them have tax 
liability with respect to which to claim the credit. This explains why 
I have not proposed to utilize tax credits to spur countermeasures 
research. It is also clear that the market for countermeasures is even 
more speculative than the market

[[Page 23799]]

for orphan drugs and we need to enact a broader and deeper package of 
incentives.
  The Government determines which research is covered by the 
legislation. The legislation confers on the Director of the Office of 
Homeland Security, in consultation with the Secretary of Defense and 
Secretary of Health and Human Services, authority to set the list of 
agents and toxins with respect to which the legislation applies. The 
Director determines which agents and toxins present a threat and on 
whether the countermeasures are more likely to be developed with the 
application of the incentives of the legislation. The Director may 
determine that an agent or toxin does not present a threat or that 
countermeasures are not more likely to be developed with the 
incentives. The legislation includes an illustrative list of agents and 
toxins that might be selected by the Director. The decisions of the 
Director are final and cannot be subject to judicial review.
  Once the list of agents and toxins is set, companies may register 
with the Food and Drug Administration their intent to undertake 
research and development of a countermeasure to prevent or treat the 
agent or toxin. This registration is required only for companies that 
seek to be eligible for the tax, purchase, patent, and liability 
provisions of the legislation. The registration does not apply to non-
profit entities or to companies that do not seek such eligibility. The 
registration requirement gives the FDA vital information about the 
research effort and the personnel involved with the research.
  The Director of the Office of Homeland Security then may certify that 
the company is eligible for the tax, purchase, patent, and liability 
incentives in the legislation. Eligibility for the purchase fund, 
patent and liability incentives is contingent on successful development 
of a countermeasure according to the standards set in the legislation.
  The legislation contemplates that a company might well register and 
seek certification with respect to more than one research project and 
become eligible for the tax, purchase, patent, and liability incentives 
for each. There is no policy rationale for limiting a company to one 
registration and one certification.
  This process is similar to the current registration process for 
research on orphan, rare, diseases. In that case, companies that are 
certified by the FDA become eligible for both tax and market 
exclusivity incentives. This process gives the Government complete 
control on the number of registrations and certifications. This gives 
the Government control over the cost and impact of the legislation on 
private sector research.
  The legislation includes three tax incentives to enable biotechnology 
companies to form capital to fund research and development of 
countermeasures. Companies must irrevocably elect only one of the 
incentives with regard to the research. These tax incentives are 
available only to biotechnology companies with less than $750,000,000 
in paid-in capital.
  The paid-in capital of a corporation is quite distinct from the 
market capitalization of the firm. The paid-in capital is the aggregate 
amount paid by investors into the corporation when this stock was 
issued, the price at issue multiplied by the number of shares sold. The 
market capitalization is the value of this stock in the stock market as 
it is traded among investors. I have focused on the paid-in capital as 
this is the amount of capital actually available to the corporation to 
fund its research.
  The legislation includes three different tax incentives to give 
companies flexibility in forming capital to fund the research. Each of 
the options comes with advantages and limitations that may make it 
appropriate or inappropriate for a given company or research project. 
We do not now know fully how investors and capital markets will respond 
to the different options, but we assume that companies will consult 
with the investor community about which option will work best for a 
given research project. Capital markets are diverse and investors have 
different needs and expectations. Over time these markets and investor 
expectations evolve. If companies register for more than one research 
project, they may well utilize different tax incentives for the 
different projects.
  Companies are permitted to undertake a series of discrete and 
separate research projects and make this election with respect to each 
project. They may only utilize one of the options with respect to each 
of these research projects.
  The company is eligible to establish an R&D Limited Partnership to 
conduct the research. The partnership passes through all business 
deductions and credits to the partners. For example, under this 
arrangement, the research and development tax credits and depreciation 
deductions for the company may be passed by the corporation through to 
its partners to be used to offset their individual tax liability. These 
deductions and credits are then lost to the corporation.
  The company is eligible to issue a special class of stock for the 
entity to conduct the research. The investors would be entitled to a 
zero capital gains tax rate on any gains realized on the stock held for 
at least 3 years. This is a modification of the current Section 1202 
where only 50 percent of the gains are not taxed. This provision is 
adapted from legislation I have introduced, S. 1134, and introduced in 
the House by Representatives Dunn and Matsui, H.R. 2383. A similar bill 
has been introduced by Senator Collins, S. 455.
  The company is eligible to receive refunds for Net Operating Losses, 
NOLs, to fund the research. Under current law, net operating losses can 
only be used to offset a company's tax liability. If a company has no 
profits and therefore no tax liability, it cannot use its net operating 
losses. It can carry them forward, but the losses have no current 
value. This option would allow the company to receive a refund of its 
NOLs at a rate of 75 percent of their value. Once the company becomes 
profitable, and incurs tax liability, it must repay all of the refunds 
it has received. The provision in my legislation is adapted from bills 
introduced by Senator Torricelli, S. 1049, and Congressman Robert 
Matsui, H.R. 2153.
  A company that elects to utilize one of these incentives is not 
eligible to receive benefits of the Orphan Drug Tax Credit. Companies 
that can utilize tax credits, companies with taxable income and tax 
liability, might find the Orphan Credit more valuable. The legislation 
includes an amendment to the Orphan Credit to correct a defect in the 
current credit. The amendment has been introduced in the Senate as S. 
1341 by Senators Hatch, Kennedy and Jeffords. The amendment simply 
states that the Credit is available starting the day an application for 
orphan drug status is filed, not the date the FDA finally acts on it. 
The amendment was one of many initiatives championed by Lisa J. Raines, 
who died on September 11 in the plane that hit the Pentagon, and the 
amendment is named in her honor. As we go forward in the legislative 
process, I hope we will have an opportunity to speak in more detail 
about the service of Ms. Raines on behalf of medical research, 
particularly on rare diseases.
  My legislation does not include an enhanced tax credit for this 
research. Very few biotechnology companies can utilize a tax credit as 
they have no taxable revenue and tax liability with respect to which to 
claim a credit. Instead, they can carry the credit forward and utilize 
it when they do have tax liability. But that may be many years from 
now. That is why I have focused on other incentives to assist the 
biotechnology industry to form capital to fund this countermeasures 
research.
  The guaranteed purchase fund, and the patent bonus and liability 
provisions described below provide an additional incentive for 
investors to fund the research. Without capital from investors these 
biotechnology companies do not have the capacity, irrespective of their 
interest, to conduct the research.
  The market for countermeasures is speculative and small. This means 
that if a company successfully develops a countermeasure, it may not 
receive

[[Page 23800]]

sufficient revenue on sales to justify the risk and expense of the 
research. This is why the legislation establishes a countermeasures 
purchase fund that will define the market for the products with some 
specificity before the research begins.
  The fund managers will set standards for which countermeasures it 
will purchase and define the financial terms of the purchase 
commitment. This will enable companies to evaluate the market potential 
of its research before it launches into the project. The specifications 
will need to be set with sufficient specificity so that the company, 
and its investors, can evaluate the market and with enough flexibility 
so that it does not inhibit the innovativeness of the researchers. This 
approach is akin to setting a performance standard for a new military 
aircraft.
  The legislation provides that the purchase fund is not obligated to 
purchase more than one product per class. This seeks to avoid a 
situation where the Government must purchase more than one product when 
it only intends to use one. But it might make more sense, as an 
incentive, for the Government to commit to purchasing more than one 
product so that many more than one company conducts the research. A 
winner-take-all system may well intimidate some companies and we may 
end up without a countermeasure to be purchased. It is also possible 
that we will find that we need more than one countermeasure because 
different products are useful for different patients. We may also find 
that the first product developed is not the most effective. Given the 
urgency of the research, we would like to have the problem of seeing 
more than one effective countermeasure developed. How we reconcile 
these competing considerations is a key issue we need to resolve.
  My legislation provides that the countermeasure must be approved by 
the FDA. The standards that the FDA should apply in reviewing these 
types of products is an issue have been discussed in some detail and we 
need to fashion the most effective provision on this subject. We need 
to recognize that the requirement for FDA approval might, in some 
cases, not be needed, appropriate or possible.
  The purchase commitment for countermeasures is available to any 
company irrespective of its paid-in capital.
  Intellectual property protection of research is essential to 
biotechnology companies for one simple reason: they need to know that 
if they successfully develop a medical product another company cannot 
expropriate it. It's a simple matter of incentives.
  The patent system has its basis in the U.S. Constitution where the 
Federal Government is given the mandate to ``promote the Progress of 
Science and the Useful Arts by securing for a limited time to Authors 
and Inventors the exclusive right to their respective Writings and 
Discoveries.'' In exchange for full disclosure of the terms of their 
inventions, inventors are granted the right to exclude others from 
making, using, or selling their inventions for a limited period of 
time. This quid pro quo provides investors with the incentive to 
invent. In the absence of the patent law, discoverable inventions would 
be freely available to anyone who wanted to use them and inventors 
would not be able to capture the value of their inventions or secure a 
return on their investments.
  The patent system strikes a balance. Companies receive limited 
protection of their inventions if they are willing to publish the terms 
of their invention for all to see. At the end of the term of the 
patent, anyone can practice the invention without any threat of an 
infringement action. During the term of the patent, competitors can 
learn from the published description of the invention and may well find 
a new and distinct patentable invention.
  The legislation provides two types of intellectual property 
protection. One simply provides that the term of the patent on the 
countermeasure will be the term of the patent granted by the Patent and 
Trademark Office without any erosion due to delays in approval of the 
product by the Food and Drug Administration. The second provides that a 
company that successfully develops a countermeasure will receive a 
bonus of 2 years on the term of any patent held by that company. 
Companies must elect one of these two protections and only small 
biotechnology companies may elect the second protection. Large, 
profitable pharmaceutical companies may elect only the first of the two 
options.
  The first protection against erosion of the term of the patent is an 
issue that is partially addressed in current law, the Hatch-Waxman 
Patent Term Restoration Act. That act provides partial protection 
against erosion of the term, length of a patent when there are delays 
at the FDA in approving a product. The erosion occurs when the PTO 
issues a patent before the product is approved by the FDA. In these 
cases, the term of the patent is running but the company cannot market 
the product. The Hatch-Waxman Act provides some protections against 
erosion of the term of the patent, but the protections are incomplete. 
As a result, many companies end up with a patent with a reduced term, 
sometimes substantially reduced.
  The issue of patent term erosion has become more serious due to 
changes at the PTO in the patent system. The term of a patent used to 
be fixed at 17 years from the date the patent was granted by the PTO. 
It made no difference how long it took for the PTO to process the 
patent application and sometimes the processing took years, even 
decades. Under this system, there were cases where the patent would 
issue before final action at the FDA, but there were other cases where 
the FDA acted to approve a product before the patent was issued. 
Erosion was an issue, but it did not occur in many cases.
  Since 1995 the term of a patent has been set at 20 years from the 
date of application for the patent. This means that the processing time 
by the PTO of the application all came while the term of the patent is 
running. This gives companies a profound incentive to rush the patent 
through the PTO. Under the old system, companies had the opposite 
incentive. With patents being issued earlier by the PTO, the issue of 
erosion of patent term due to delays at the FDA is becoming more 
serious and more common.
  The provision in my legislation simply states that in the case of 
bioterrorism countermeasures, no erosion in the term of the patent will 
occur. The term of the patent at the date of FDA approval will be the 
same as the term of the patent when it was issued by the PTO. There is 
no extension of the patent, simply protections against erosion. Under 
the new 20-year term, patents might be more or less than 17 years 
depending on the processing time at the PTO, and all this legislation 
says is that whatever term is set by the PTO will govern irrespective 
of the delays at the FDA. This option is available to any company that 
successfully develops a countermeasure eligible to be purchased by the 
fund.
  The second option, the bonus patent term, is only available to small 
biotechnology companies. It provides that a company that successfully 
develops a countermeasure is entitled to a 2-year extension of any 
patent in its portfolio. This does not apply to any patent of another 
company bought or transferred in to the countermeasure research 
company.
  I am well aware that this bonus patent term provision will be 
controversial with some. A company would tend to utilize this option if 
it owned the patent on a product that still had, or might have, market 
value at the end of the term of the patent. Because this option is only 
available to small biotechnology companies, most of whom have no 
product on the market, in most cases they would be speculating about 
the value of a product at the end of its patent. The company might 
apply this provision to a patent that otherwise would be eroded due to 
FDA delays or it might apply it to a patent that was not eroded. The 
result might be a patent term that is no longer than the patent term 
issued by the PTO. It all depends on which companies elect 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

[[Page 23801]]

generics. This would tend to shift some of the cost of the incentive to 
develop a countermeasure to insurance companies and patients with an 
unrelated disease.
  My rationale for including the patent bonus in the legislation is 
simple: I want this legislation to say emphatically that we mean 
business, we are serious, and we want biotechnology companies to 
reconfigure their research portfolios to focus in part on development 
of countermeasures. The other provisions in the legislation are 
powerful, but they may not be sufficient.
  This proposal protects companies willing to take the risks of 
producing anti-terrorism products for the American public from 
potential losses incurred from lawsuits alleging adverse reactions to 
these products. It also preserves the right for plaintiffs to seek 
recourse for alleged adverse reactions in Federal District Court, with 
procedural and monetary limitations.
  Under the plan, the Secretary of HHS is authorized, and in the case 
of contractors with HHS, is required, to indemnify and defend persons 
engaged in research, development and other activities related to 
biological defense products through execution of ``indemnification and 
defense agreements.'' An exclusive means of resolving civil cases that 
fall within the scope of the indemnification and defense agreements is 
provided with litigation rights for injured parties. Non-economic 
damages are limited to $250,000 per plaintiff and no punitive or 
exemplary damages may be awarded.
  Some have tried to apply the existing Vaccine Injury Compensation 
Program, VICP, to this national effort. That is inappropriate because 
that program will be extremely difficult to use, both administratively 
and scientifically. For example, it would take several years to develop 
the appropriate ``table'' that identifies a compensable injury. 
Companies will be liable during this process. Note that when VICP was 
created, there had been studies of what adverse reactions to mandated 
childhood vaccines had occurred and the table was based largely on this 
experience. Even so, it has taken years of effort, ultimately resulting 
in wholesale revisions to the table by regulation, to get the current 
table in place. For anti-bioterrorism products currently being 
developed, it will simply be impossible to construct a meaningful 
Vaccine Injury Table, there will be no experience with the product.
  The Frist-Kennedy bill relies on the President's Executive Order 
regarding liability protections, so there is a basis for an agreement 
regarding this issue as applied to bioterrorism countermeasures. The 
provisions that I have proposed are superior to those in the Executive 
Order because the order provides protection only on a contract basis. 
So, it doesn't provide protection based on the product being developed, 
only if that product is being developed under a specific government 
contract. Therefore, it's negotiated case by case by HHS and a company. 
Your proposal provides assurance to companies, especially small and 
medium sized companies, that they will be protected. This will allow 
them to go forward with their development plans. Their lawyers may be 
leery of trying to negotiate their own deal with HHS. So, the EO may be 
effective for a large company when it negotiates making additional 
smallpox vaccine, but it provides little assurance to a small company 
that wants to start development. Also, the administration says the EO 
will be used to protect companies, however, the next administration 
could interpret it differently. That's why a statutory provision will 
provide greater assurance to companies.
  The legislation focuses intently on development of vaccines and 
medicines, but it is possible that we will face biological agents and 
chemical agents we've never seen before. As I've mentioned, the Soviet 
Union bioterror research focused in part on use of genetic modification 
technology to develop agents and toxins that currently-available 
antibiotics can not treat. Australian researchers accidentally created 
a modified mousepox virus, which does not affect humans, but it was 100 
percent lethal to the mice. Their research focused on trying to make a 
mouse contraceptive vaccine for pest control. The surprise was that it 
totally suppressed the ``cell-mediated response,'' the arm of the 
immune system that combats viral infection. To make matters worse, the 
engineered virus also appears unnaturally resistant to attempts to 
vaccinate the mice. A vaccine that would normally protect mouse strains 
that are susceptible to the virus only worked in half the mice exposed 
to the killer version. If bioterrorists created a human version of the 
virus, vaccination programs would be of limited use. This highlights 
the drawback of working on vaccines against bioweapons rather than 
treatments.
  With the advances in gene sequencing, genomics, we will know the 
exact genetic structure of a biological agent. This information in the 
wrong hands could easily be manipulated to design and possibly grow a 
lethal new bacterial and viral strains not found in nature. A scientist 
might be able to mix and match traits from different microorganisms, 
called recombinant technology, to take a gene that makes a deadly toxin 
from one strain of bacteria and introduce it into other bacterial 
strains. Dangerous pathogens or infectious agents could be made more 
deadly, and relatively benign agents could be designed as major public 
health problems. Bacteria that cause diseases such as anthrax could be 
altered in such a way that would make current vaccines or antibiotics 
against them ineffective. It is even possible that a scientist could 
develop an organism that develops resistance to antibiotics at an 
accelerated rate.
  This means we need to develop technology, research tools, that will 
enable us to quickly develop a tailor-made, specific countermeasure to 
a previously unknown organism or agent. These research tools will 
enable us to develop a tailor-made vaccine or drug to deploy as a 
countermeasure against a new threat. The legislation authorizes 
companies to register and receive a certification making them eligible 
for the tax incentives in the bill for this research.
  Perhaps the greatest strength of our biomedical research 
establishment in the United States is the synergy between our superb 
basic research institutions and private companies. The Bayh-Dole Act 
and Stevenson-Wydler Act form the legal framework for mutually 
beneficially partnerships between academia and industry. My legislation 
strengthens this synergy and these relationships with two provisions, 
one to upgrades in the basic research infrastructure available to 
conduct research on countermeasures and the other to increase 
cooperation between the National Institutes of Health and private 
companies.
  Research on countermeasures necessitates the use of special 
facilities where biological agents can be handled safely without 
exposing researchers and the public to danger. Very few academic 
institutions or private companies can justify or capitalize the 
construction of these special facilities. The Federal Government can 
facilitate research and development of countermeasures by financing the 
construction of these facilities for use on a fee-for-service basis. 
The legislation authorizes appropriations for grants to non-profit and 
for-profit institutions to construct, maintain, and manage up to ten 
Biosafety Level 3-4 facilities, or their equivalent, in different 
regions of the country for use in research to develop countermeasures. 
BSL 3-4 facilities are ones used for research on indigenous, exotic or 
dangerous agents with potential for aerosol transmission of disease 
that may have serious or lethal consequences or where the agents pose 
high risk of life-threatening disease, aerosol-transmitted lab 
infections, or related agents with unknown risk of transmission. The 
Director of the Office and NIH shall issue regulations regarding the 
qualifications of the researchers who may utilize the facilities. 
Companies that have registered with and been certified by the Director, 
to develop countermeasures under Section 5(d) of the legislation, shall 
be given priority in the use of the facilities.

[[Page 23802]]

  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.
  My legislation is carefully calibrated to provide incentives only 
where they are needed. This accounts for the choices in the legislation 
about which provisions are available to small biotechnology companies 
and large pharmaceutical companies.
  Most biotechnology companies rely on infusions of investor capital to 
fund research, so the capital formation tax incentives only apply to 
them. Large pharmaceutical companies have ample revenues from product 
sales, and access to debt capital, so they do not need these incentives 
for capital formation.
  The guaranteed purchase fund applies to any company that successfully 
develops a countermeasure. There is no reason to make any distinction 
between small and large companies. They all need to know the terms and 
dimensions of the potential market for the products they seek to 
develop. With countermeasures the market may well be uncertain or 
small, necessitating the creation of the purchase fund.
  The patent protection provisions are also well calibrated. Both small 
and large companies face the patent term erosion problem due to delays 
at the FDA. There is no reason why companies that successfully develop 
a countermeasure should end up with a patent with an eroded term.
  With regard to the patent bonus provision, this is included to 
supplement the capital formation tax incentives for small biotechnology 
companies. It provides a dramatic statement to investors that this 
research makes good business sense. As capital formation is not a 
challenge for a large pharmaceutical company, this patent bonus 
provision is not available to them.
  Finally, with regard to the liability provisions, there is no reason 
to make any distinction between small and large companies.
  The legislation makes choices. It sets the priorities. It provides a 
dose of incentives and seeks a response in the private sector. We are 
attempting here to do something that has not been done before. This is 
uncharted territory. And it's also an urgent mission.
  There may be cases where a countermeasure developed to treat a 
biological toxin or chemical agent will have applications beyond this 
use. A broad-spectrum antibiotic capable of treating many different 
biological agents may well have the capacity to treat naturally 
occurring diseases.
  This same issue arises with the Orphan Drug Act, which provides both 
tax and FDA approval incentives for companies that develop medicines to 
treat rare diseases. In some cases these treatments can also be used 
for larger disease populations. There are few who object to this 
situation. We have come to the judgment that the urgency of this 
research is worth the possible additional benefits that might accrue to 
a company.
  In the context of research to develop countermeasures, I do not 
consider it a problem that a company might find a broader commercial 
market for a countermeasure. Indeed, it may well be the combination of 
the incentives in this legislation and these broader markets that 
drives the successful development of a countermeasure. If our intense 
focus on developing countermeasures, and research tools, provides 
benefits for mankind going well beyond terror weapons, we should 
rejoice. If this research helps us to develop an effective vaccine or 
treatment for AIDS, we should give the company the Nobel Prize for 
Medicine. If we do not develop a vaccine or treatment for AIDS, we may 
see 100 million people die of AIDS. We also have 400 million people 
infected with malaria and more than a million annual deaths. Millions 
of children die of diarrhea, cholera and other deadly and disabling 
diseases. Countermeasures research may deepen our understanding of the 
immune system and speed development of treatments for cancer and 
autoimmune diseases. That is not the central purpose of this 
legislation, but it is an additional rationale for it.
  The issue raised by my legislation is very simple: do we want the 
Federal Government to fund and supervise much of the research to 
develop countermeasures or should we also provide incentives that make 
it possible for the private sector, at its own expense, and at its own 
risk, to undertake this research for good business reasons. The Frist-
Kennedy legislation focuses effectively on direct Federal funding and 
coordination issues, but it does not include sufficient incentives for 
the private sector to undertake this research on its own initiative. 
Their proposal and mine are perfectly complimentary. We need to enact 
both to ensure that we are prepared for bioterror attacks.
  I ask unanimous consent that an outline of my legislation appear at 
this point in the Record.
  There being no objection, the outline was ordered to be printed in 
the Record, as follows

  Biological and Chemical Weapons Countermeasures Research Act of 2001

       The premise of the legislation is that there will be limits 
     on direct Federal funding of research and development of 
     countermeasures, vaccines, drugs, and other medicines, to 
     prevent or treat infections from biological and chemical 
     agents and toxins. The legislation proposes incentives that 
     will enable biotechnology companies to take the initiative, 
     for good business reasons, to conduct research to develop 
     these countermeasures.
       The incentives are needed because most biotech companies 
     have no approved products or revenue from product sales to 
     fund research. They rely on investors and equity capital 
     markets to fund the research. These companies must focus on 
     research that will lead to product sales and revenue and end 
     their dependence on investor capital. When they are able to 
     form the capital to fund research, biotech companies tend to 
     be innovative and nimble and focused on the intractable 
     diseases for which no effective medical treatments are 
     available.
       There is no established or predictable market for 
     countermeasures. Investors are justifiably reluctant to fund 
     this research, which will present technical challenges 
     similar in complexity to development of effective treatments 
     for AIDS. Investors need assurances that research on 
     countermeasures has the potential to provide a rate of return 
     commensurate with the risk, complexity and cost of the 
     research, a rate of return comparable to that which may arise 
     from a treatment for cancer, MS, Cystic Fibrosis and other 
     major diseases or from other investments.
       The legislation provides tax incentives to enable biotech 
     companies to form capital to conduct the research. It then 
     provides a guaranteed and pre-determined market for the 
     countermeasures and special intellectual property protections 
     to serve as a substitute for a market. Finally, it 
     establishes liability protections for the countermeasures 
     that are developed.
       Specifics of the legislation are as follows: one, Office of 
     Homeland Security sets research priorities in advance. 
     Biotech companies that seek to be eligible for the incentives 
     in the legislation must register with the Food and Drug 
     Administration and be certified as eligible for the 
     incentives; two, once a company is certified as eligible for 
     the incentives, it becomes eligible for the tax, purchasing, 
     patent, and liability provisions. A company is eligible for 
     certification for the tax and patent provisions if it seeks 
     to develop a research tool that will make it possible to 
     quickly develop a countermeasure to a previously unknown 
     agent or toxin, or an agent or toxin not targeted for 
     research; three, Capital Formation for Countermeasures 
     Research: The legislation provides that a company seeking to 
     fund research is eligible to elect from among three tax 
     incentives. The three alternatives are as follows: a. The 
     company is eligible to establish an R&D Limited Partnership 
     to conduct the research. The partnership passes through all 
     business deductions and credits to the partners; b. The 
     company is eligible to issue a special class of stock for the 
     entity to conduct the research. The investors would be 
     entitled to a zero capital gains tax rate on any gains 
     realized on the stock; and, c. The company is eligible to 
     receive refunds for Net Operating Losses, NOLs, to fund the 
     research.

[[Page 23803]]

       These tax incentives are available only to biotechnology 
     companies with less than $750,000 in paid-in capital.
       A company must elect only one of these incentives and, if 
     it elects one of these incentives, it is then not eligible to 
     receive benefits under the Orphan Drug Act. The legislation 
     includes amendments to the Orphan Drug Act championed by 
     Senators Hatch, Kennedy and Jeffords, S. 1341. The amendments 
     make the Credit available from the date of the application 
     for Orphan Drug status, not the date the application is 
     approved as provided under current law; four, Countermeasure 
     Purchase Fund: The legislation provides that a company that 
     successfully develops a countermeasure, through FDA approval, 
     is eligible to sell the product to the Federal Government at 
     a pre-established price and in a pre-determined amount. The 
     company is given notice of the terms of the sale before it 
     commences the research. Sales to this fund may be made by any 
     company irrespective of its paid-in capital; five, 
     Intellectual Property Incentives: The legislation provides 
     that a company that successfully develops a countermeasure is 
     eligible to elect one of two patent incentives. The two 
     alternatives are as follows: a. The company is eligible to 
     receive a patent for its invention with a term as long as the 
     term of the patent when it was issued by the Patent and 
     Trademark Office, without any erosion due to delays in the 
     FDA approval process. This alternative is available to any 
     company that successfully develops a countermeasure 
     irrespective of its paid-in capital; b. The company is 
     eligible to extend the term of any patent owned by the 
     company for two years. The patent may not be one that is 
     acquired by the company from a third party. This is included 
     as a capital formation incentive for small biotechnology 
     companies with less than $750,000 in paid-in capital.
       Six, Liability Protections: The legislation provides for 
     protections against liability for the company that 
     successfully develops a countermeasure. This option is 
     available to any company that successfully develops a 
     countermeasure irrespective of its paid-in capital; and 
     seven, Strengthening of Biomedical Research Infrastructure: 
     Authorizes appropriations for grants to construct specialized 
     biosafety containment facilities where biological agents can 
     be handled safely without exposing researchers and the public 
     to danger. Also reauthorizes a successful NIH-industry 
     partnership challenge grants to promote joint ventures 
     between NIH and its grantees and for-profit biotechnology, 
     pharmaceutical and medical device industries with regard to 
     the development of countermeasures and research tools.

                          ____________________