[Senate Report 109-75]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 117
109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-75
======================================================================


 
    FOUNDATION FOR THE NATIONAL INSTITUTES OF HEALTH IMPROVEMENT ACT

                                _______
                                

                  May 26, 2005.--Ordered to be printed

                                _______
                                

Mr. Enzi, from the Committee on Health, Education, Labor, and Pensions, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 302]

    The Committee on Health, Education, Labor, and Pensions, to 
which was referred the bill (S. 302) to make improvements in 
the Foundation for the National Institutes of Health, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and summary of the bill..................................1
 II. Background and need for legislation..............................2
III. Legislative history and committee action.........................2
 IV. Explanation of bill and committee views..........................2
  V. Cost estimate....................................................3
 VI. Application of law to the legislative branch.....................4
VII. Regulatory impact statement......................................4
VIII.Section-by-section analysis......................................4

 IX. Changes in existing law..........................................4

                   I. Purpose and Summary of the Bill

    The purpose of S. 302, the Foundation for the National 
Institutes of Health Improvement Act, is to make technical 
corrections and improvements to Section 499 of the Public 
Health Service Act (PHSA), which established the Foundation for 
the National Institutes of Health (the Foundation). Most 
significantly, these corrections clarify membership in the 
Foundation's board of directors and assure that the Foundation 
receives funds from the National Institutes of Health (NIH) to 
support the Foundation's administrative and operating expenses.

                II. Background and Need For Legislation

    The Foundation is a private, not-for-profit foundation 
established by Congress to raise private funds to support the 
work of the NIH. Authorized in 1990 and incorporated as a 
nonprofit organization in Maryland 9 years ago, the Foundation 
in 2003 raised $426 in private funds for every $1 that the 
Foundation received from the NIH, and 85 percent of the money 
the Foundation spent in 2003 directly supported the programs 
and initiatives of the NIH, with 15 percent used for 
administration and fundraising. Since its inception, the 
Foundation has raised $276.5 million or $66 in private support 
for every appropriated dollar received.
    The Foundation is currently managing 38 programs that are 
supported by $276.5 million generated from private 
contributions. In 2003, Bill Gates announced a gift to the 
Foundation for NIH of $200 million to establish the Grand 
Challenges in Global Health initiative, supporting research on 
global health priorities. When the Congress passed the Best 
Pharmaceuticals for Children Act in 2001 (P.L. 107-109), it 
charged the Foundation with collecting private funds to study 
drugs in children. The Foundation's role with the NIH is 
expected to continue to grow productively in the coming years.
    One current project is the construction of the Edmond J. 
Safra Family Lodge on the NIH campus. Families of patients 
receiving in-patient treatment at the NIH Clinical Center will 
have the Lodge as a place to stay, at no cost to them. The 
project is funded completely by private funds donated through 
the Foundation, with services and land donated by the NIH. In 
addition, the Foundation currently has partnerships with the 
NIH that include helping develop new cancer treatments, two 
initiatives identifying biomarkers for Osteoarthritis and 
Alzheimer's Disease, and others that highlight the great 
promise of genomics. Through a public-private partnership, the 
Foundation helped accelerate the sequencing of the mouse 
genome.
    The operating costs for the Foundation climbed from the 
$0.944 million in 2002 to $3.09 million in 2005. The Bill & 
Melinda Gates Foundation provides an additional $2.25 million 
in funding to cover the direct costs associated with the Grand 
Challenges initiative; however, the Foundation will also expand 
its staffing for media relations and communications functions, 
as well as staffing for its public-private partnerships.

             III. Legislative History and Committee Action

    On February 7, 2005, Senator Kennedy, for himself and 
Senator Gregg, Senator Frist, Senator Enzi, and Senator 
Bingaman, introduced S. 302, to amend Section 499 of the PHSA 
to improve the Foundation for the National Institutes of 
Health. On February 9, 2005, the committee held an executive 
session to consider S. 302. After accepting a manager's 
amendment, the committee approved S. 302 by unanimous voice 
vote.

              IV. Explanation of Bill and Committee Views

    In the past, the Foundation has been provided $500,000 
through the NIH appropriation to help defray its operating and 
administrative costs. The legislation will correct the current 
need for a yearly line appropriation of $500,000 for the 
Foundation in the NIH appropriation bill, and will allow the 
Foundation to continue its effective support for the work and 
the mission of the NIH. The legislation permits the NIH to 
support the work of the Foundation beyond the $500,000 baseline 
if, in the judgment of the NIH Director, an occasion were to 
arise that would warrant it.
    In addition, when Congress charged the Foundation with 
collecting private funds to study drugs in children in the 
BPCA, it added the Commissioner of Food and Drugs as an ex 
officio member of the board of the Foundation. This addition 
failed to take account of the fact that, under Section 
499(d)(I)(D)(ii) of the PHSA, the terms of service of the 
original ex officio members of the board (the chair and ranking 
minority member of the Subcommittee on Health and the 
Environment of the House Energy and Commerce Committee, the 
chair and ranking minority member of the Senate Committee on 
Labor and Human Resources, and the Director of NIH) terminated 
on appointment of the initial board. The legislation maintains 
the policy that the terms of service of the congressional 
members of the board terminated upon initial appointment of the 
board, but clarifies that the NIH Director and the FDA 
Commissioner remain as ex officio members of the board.

                            V. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 14, 2005.
Hon. Mike B. Enzi,
Chairman, Committee on Health, Education, Labor, and Pensions, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 302, the Foundation 
for the National Institutes of Health Improvement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Christopher 
Topoleski.
            Sincerely,
                                     Elizabeth M. Robinson,
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

S. 302--Foundation for the National Institutes of Health Improvement 
        Act

    S. 302 would modify the Public Health Service Act to change 
the law that governs the Foundation for the National Institutes 
of Health (NIH), a private, not-for-profit entity that raises 
private funds to support the work of NIH. It would specify that 
the Director of the National Institutes of Health and the 
Commissioner of the Food and Drug Administration remain as ex 
officio members of the board, make provisions for the continued 
operation of the board when vacancies occur, and correct an 
incorrect cross-reference in the statute. The bill also would 
require that $500,000 out of funds appropriated for NIH be 
transferred to the foundation each year. Such annual payments 
are authorized under current law but are not required.
    CBO estimates that implementing S. 302 would have no 
significant budgetary effect in any individual year. Enacting 
the bill would not affect receipts or direct spending.
    S. 302 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact is Christopher Topoleski. This 
estimate was approved by Peter H. Fontaine, Deputy Assistance 
Director for Budget Analysis.

            VI. Application of Law to the Legislative Branch

    S. 302 amends Section 499 of the PHSA to make improvements 
to the functioning of the Foundation for the National 
Institutes of Health, a non-profit corporation in the State of 
Maryland that supports the work of the NIH. As such, it has no 
application to the legislative branch.

                    VII. Regulatory Impact Statement

    The committee has determined that there will be de minimus 
changes to the regulatory burden due to this bill.

                   VIII. Section-by-Section Analysis


Sec. 1. Short title

Sec. 2. National Institutes of Health establishment and duties

    Paragraph (1)(A) makes a technical amendment to clarify 
that the NIH Director and the FDA Commissioner will serve as ex 
officio members of the board of the Foundation.
    Paragraph (1)(B) clarifies an ambiguous provision of 
current law and codifies current policy under which new members 
of the Foundation's board are appointed under the bylaws of the 
Foundation.
    Paragraph (1)(C) makes a conforming amendment.
    Paragraph (2)(A) corrects an incorrect cross-reference in 
section 499 of the PHSA.
    Paragraph (2)(B) requires the Foundation's annual reports 
to include an accounting of the use of funds transferred from 
the NIH to the Foundation for its operating expenses and that 
these reports be provided to the appropriate committees in 
Congress.
    Paragraph (2)(C) makes a technical correction to clarify 
that the NIH may accept transfers of funds from the Foundation.
    Paragraph (3) makes a change to require the NIH Director to 
transfer no less than $500,000 and no more than $1,250,000 to 
the Foundation for operating expenses.

                      IX. Changes in Existing Law

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

PUBLIC HEALTH SERVICE ACT

           *       *       *       *       *       *       *


        PART I--FOUNDATION FOR THE NATIONAL INSTITUTES OF HEALTH


SEC. 499. ESTABLISHMENT AND DUTIES OF FOUNDATION.

    (a) In General.--* * *

           *       *       *       *       *       *       *

    (d) Board of Directors.--
          (1) Composition.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D)(i) * * *

           *       *       *       *       *       *       *

                  [(ii) Upon the appointment of the members of 
                the Board under clause (i)(II), the terms of 
                service of the ex officio members of the Board 
                as members of the Board shall terminate.]
                  (ii) Upon the appointment of the appointed 
                members of the Board under clause (i)(II), the 
                terms of service as members of the Board of the 
                ex officio members of the Board described in 
                clauses (i) and (ii) of subparagraph (B) shall 
                terminate. The ex officio members of the Board 
                described in clauses (iii) and (iv) of 
                subparagraph (B) shall continue to serve as ex 
                officio members of the Board.

           *       *       *       *       *       *       *

                  (G) The Board may, through amendments to the 
                bylaws of the Foundation, provide that the 
                number of appointed members of the Board shall 
                be greater than the number specified in 
                subparagraph (C).

           *       *       *       *       *       *       *

          (3) Terms and vacancies.--
                  (A) * * *
                  [(B) Any vacancy in the membership of the 
                Board shall be filled in the manner in which 
                the original position was made and shall not 
                affect the power of the remaining members to 
                execute the duties of the Board.]
                  (B) Any vacancy in the membership of the 
                appointed members of the Board shall be filled 
                in accordance with the bylaws of the Foundation 
                established in accordance with paragraph (6), 
                and shall not affect the power of the remaining 
                appointed members to execute the duties of the 
                Board.

           *       *       *       *       *       *       *

          (5) Meetings and quorum.--A majority of the appointed 
        members of the Board shall constitute a quorum for 
        purposes of conducting the business of the Board.

           *       *       *       *       *       *       *

    (j) General Provisions.--
          (1) Foundation integrity.--* * *
          (2) Financial conflicts of interest.--Any individual 
        who is an officer, employee, or member of the Board of 
        the Foundation may not (in accordance with policies and 
        requirements developed under subsection 
        [(d)(2)(B)(i)(II)] (d)(6) personally or substantially 
        participate in the consideration or determination by 
        the Foundation of any matter that would directly or 
        predictably affect any financial interest of the 
        individual or a relative affect any financial interest 
        of the individual or a relative (as such term is 
        defined in section 109(16) of the Ethics in Government 
        Act of 1978) of the individual, of any business 
        organization or other entity, or of which the 
        individual is an officer or employee, or is negotiating 
        for employment, or in which the individual has any 
        other financial interest.

           *       *       *       *       *       *       *

          (4) Reports.--
                  (A) Not later than 5 months following the end 
                of each fiscal year, the Foundation shall 
                publish a report describing the activities of 
                the Foundation during the preceding fiscal 
                year. Each such report shall include for the 
                fiscal year involved a comprehensive statement 
                of the operations, activities, financial 
                condition, and accomplishments of the 
                Foundation, including an accounting of the use 
                of amounts transferred under subsection (l).

           *       *       *       *       *       *       *

                  [(C) The Foundation shall make copies of each 
                report submitted under subparagraph (A) 
                available for public inspection, and shall upon 
                request provide a copy of the report to any 
                individual for a charge not exceeding the cost 
                of providing the copy.]
                  (C) The Foundation shall make copies of each 
                report submitted under subparagraph (A) 
                available--
                          (i) for public inspection, and shall 
                        upon request provide a copy of the 
                        report to any individual for a charge 
                        that shall not exceed the cost of 
                        providing the copy; and
                          (i) to the appropriate committees of 
                        Congress.

           *       *       *       *       *       *       *

          (10) Transfer of funds.--The Foundation may transfer 
        funds to the National Institutes [of Health.] of Health 
        and the National Institutes of Health may accept 
        transfers of funds from the Foundation.

           *       *       *       *       *       *       *

    [(1) Funding.--
          [(1) Authorization of appropriations.--For the 
        purpose of carrying out this part, there is authorized 
        to be appropriated an aggregate $500,000 for each 
        fiscal year.
          [(2) Limitation regarding other funds.--Amounts 
        appropriated under any provision of law other than 
        paragraph (1) may not be expended to establish or 
        operate the Foundation.]
    (l) Funding.--From amounts appropriated to the National 
Institutes of Health, for each fiscal year, the Director of NIH 
shall transfer not less than $500,000 and not more than 
$1,250,000 to the Foundation.

           *       *       *       *       *       *       *


                                  
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