Joseph Lieberman

Mr. LIEBERMAN

Mr. LIEBERMAN. I would be glad to.

Mr. LIEBERMAN

Mr. LIEBERMAN. Madam President, I rise today to congratulate and recognize Mrs. Sisel Klurman for being honored by the Florida Friends of Bar-Ilan University and setting the standards for ``Women and Entrepreneurship: From Adversity to Achievement.'' Bar-Ilan, Israel's largest university, is a leading academic institution with over 30,000 students and extensive disciplines. Mrs. Klurman is a founder of the Rabbi Emanuel Rackman International Center for Women and has been a benefactor to the University. Her affiliation with Bar-Ilan University is based on the University's philosophy that blends its unique formula of tradition with modern technologies and scholarship. Mrs. Klurman was raised with a true love and appreciation for her Jewish culture and tradition by her parents and grandparents. In 1944 she and her husband, Shmuel Aba, opened a way to safely smuggle Holocaust survivors from Poland to Chernowitz and, ultimately, to Israel. During the next few years, Sisel and Sam worked intensely with underground organizations fighting for the liberation of Israel and working with new immigrants. Their drive and inspiration led them to focus on perpetuating the importance of Jewish identity and education. They began to support many causes, with broad outreach, in support of Jewish education. Today, Mrs. Klurman supports Jewish education, health and welfare throughout the United States and Israel. She serves on may national boards, including Bar-Ilan University. As a businesswomen, Mrs. Klurman is President of Ganot Corporation, a real estate and development company, and president of AG Holdings, Inc., operators of nursing and rehabilitation centers. Founded by her late husband, both companies have flourished under her leadership. With all of her accomplishments and achievements, Mrs. Klurman is most proud of her family. Her four daughters, six grandchildren and their spouses, and five great grandchildren bring her endless pride and joy. Mrs. Klurman has proven that adversity can embody accomplishment. Her drive, commitment and leadership are a motivation to all women.

Mr. LIEBERMAN

Mr. LIEBERMAN. Mr. President, America has a major flaw in its defenses against bioterrorism. Hearings I chaired in the Governmental Affairs Committee on bioterrorism demonstrated that America has not made a national commitment to research and development of treatments and cures for those who might be exposed to or infected by a biological agent, chemical toxin, or radiological material. Correcting this critical gap is the purpose of legislation we are introducing today. This legislation is a refined and upgraded version of legislation I introduced last year (S. 1764, December 4, 2001) and I am delighted that Senator Hatch has joined me as the lead cosponsor of the new bill. Obviously, our first priority must be to attempt to prevent the use of these agents and toxins by terrorists, quickly assess when an attack has occurred, take appropriate public health steps to contain the exposure, stop the spread of contagion, and then detoxify the site. These are all critical functions, but in the end we must recognize that some individuals may be exposed or infected. Then the critical issue is whether we can treat and cure them and prevent death and disability. In short, we need a diversified portfolio of medicines. In cases where we have ample advance warning of an attack and specific information about the agent, toxin, or material, we may be able to vaccinate the vulnerable population in advance. In other cases, even if we have a vaccine, we might well prefer to use medicines that would quickly stop the progression of the disease or the toxic effects. We also need a powerful capacity quickly to develop new countermeasures where we face a new agent, toxin, or material. Unfortunately, we are woefully short of vaccines and medicines to treat individuals who are exposed or infected. We have antibiotics that seem to work for most of those infected in the current anthrax attack, but these have not prevented five deaths. We have no effective vaccines or medicines for most other biological agents and chemical toxins we might confront. We have very limited capacity to respond medically to a radiological attack. In some cases we have vaccines to prevent, but no medicines to treat, an agent. We have limited capacity to speed the development of vaccines and medicines to prevent or treat novel agents and toxins not currently known to us. We have provided, and should continue to provide, direct Federal funding for research and development of new medicines, however, this funding is unlikely to be sufficient. Even with ample Federal funding, many private companies will be reluctant to enter into agreements with government agencies to conduct this research. Other companies would be willing to conduct the research with their own capital and at their own risk but are not able to secure the funding from investors. The legislation we introduce today would provide incentives for private biotechnology companies to form capital to develop countermeasures--medicines--to prevent, treat and cure victims of bioterror, chemical and radiological attacks. This will enable this industry to become a vital part of the national defense infrastructure and do so for business reasons that make sense for their investors on the bottom line. Enactment of these incentives is necessary because most biotech companies have no approved products or revenue from product sales to fund research. They rely on investors and equity capital markets to fund the research. They must necessarily focus on research that will lead to product sales and revenue and, thus, to an end to their dependence on investor capital. There is no established or predictable market for countermeasures. These concerns are shared by pharmaceutical firms. Investors are justifiably reluctant to fund this research, which will present challenges similar in complexity to AIDS. Investors need assurances that research on countermeasures has the potential to provide a rate of return commensurate with the risk, complexity and cost of the research, a rate of return comparable to that which may arise from a treatment for cancer, MS, Cystic Fibrosis and other major diseases. It is in our national interest to enlist these companies in the development of countermeasures as biotech companies tend to be innovative and nimble and intently focused on the intractable diseases for which no effective medical treatments are available. The incentives we have proposed are innovative and some may be controversial. We invite everyone who has an interest and a stake in this research to enter into a dialogue about the issue and about the nature and terms of the appropriate incentives. We have attempted to anticipate the many complicated technical and policy issues that this legislation raises. The key focus of our debate should be how, not whether, we address this critical gap in our public health infrastructure and the role that the private sector should play. Millions of Americans will be at risk if we fail to enact legislation to meet this need. relationship to bioterrorism preparedness legislation My proposal is complimentary to legislation on bioterrorism preparedness we enacted earlier this year. That law, Bioweapons Preparedness Act, focuses on many needed improvements in our public health infrastructure. These investments provide the infrastructure where we could deploy the countermeasures that could be developed pursuant to the incentives proposed in my legislation. Among the provisions in the Frist-Kennedy law are initiatives regarding bioterrorism preparedness capacities, improvements in communications about bioterrorism, protection of children, protection of food safety, and global pathogen surveillance and response. We need to fully fund these new programs and capacities. My legislation builds on these provisions by providing incentives to enable the biotechnology industry acting on its own initiative to fund and conduct research on countermeasures. It includes tax, procurement, intellectual property and liability incentives. Accordingly, my proposal raises issues falling within the jurisdiction of the HELP, Finance, and Judiciary Committees. The Frist-Kennedy law and my bill are complimentary. The bottom line is that we need both bills--one focusing on public health and one focusing on medical research. Without medical research, public health workers will not have the single most important tool to use in an attack--medicine to prevent death and disability and medicine that will help us avoid public panic. Cipro as a Countermeasure We are fortunate that we have broad-spectrum antibiotics, including Cipro, to treat the type of anthrax to which so many have been exposed. This treatment seems to be effective before the anthrax symptoms become manifest, and effective to treat cutaneous anthrax, and we have been able to effectively treat some individuals who have inhalation anthrax. I am thankful that this drug exists to treat those who have been exposed, including my own Senate staff. Our offices are immediately above those of Senator Daschle. We have seen how reassuring it is that we have an effective treatment for this biological agent. We see long lines of Congressional staffers and postal workers awaiting their Cipro. Think what it would be like if we could only say, ``We have nothing to treat you and hope you don't contract the disease.'' Think of the public panic that we might see. I am grateful that this product exists and proud of the fact that the Bayer Company is based in Connecticut. The last thing we should be doing is criticizing this company for their research success. The company has dispensed millions of dollars worth of Cipro free of charge. Criticizing it for the price that it charges tells other research companies that the more valuable their products are in protecting the public health, the more likely they are to be criticized and bullied. It is fortuitous that Cipro seems to be effective against anthrax. The product was not developed with this use in mind. My point with this legislation is we cannot rely on good fortune and chance in the development of countermeasures. We need to make sure that these countermeasures will be developed. We need more companies like Bayer, we need them focused specifically on developing medicines to deal with the new bioterror threat, and we need to tell them that there are good business reasons for this focus. We also are fortunate to have an FDA-licensed vaccine, made by BioPort Corporation, that is recommended by our country's medical experts at the DOD and CDC for pre-anthrax exposure vaccination of individuals in the military and some individuals in certain laboratory and other occupational settings where there is a high risk of exposure to anthrax. This vaccine is also recommended for use with Cipro after exposure to anthrax to give optimal and long-lasting protection. That vaccine is not now available for use. We must do everything necessary to make this and other vaccines available in adequate quantities to protect against future attacks. The point of this legislation is that we need many more Cipro-like and anthrax vaccine-like products. That we have these products is the good news; that we have so few others is the problem. Biological Weapons Convention One unfortunate truth in this debate is that we cannot rely upon international legal norms and treaties alone to protect our citizens from the threat of biological or chemical attack. The United States ratified the Biological and Toxin Weapons Convention (BWC) on January 22, 1975. That Convention now counts 144 nations as parties. Twenty-two years later, on April 24, 1997, the United States Senate joined 74 other countries when it ratified the Chemical Weapons Convention (CWC). While these Conventions serve important purposes, they do not in any way guarantee our safety in a world with rogue states and terrorist organizations. The effectiveness of both Conventions is constrained by the fact that many countries have failed to sign on to either of them. Furthermore, two signatories of the BWC, Iran and Iraq, are among the seven governments that the Secretary of State has designated as state sponsors of international terrorism, and we know for a fact that they have both pursued clandestine biological weapons programs. The BWC, unlike the CWC, has no teeth--it does not include any provisions for verification or enforcement. Since we clearly cannot assume that any country that signs on to the Convention does so in good faith, the Convention does so in good faith, the Convention's protective value is limited. On November 1 of 2001, the President announced his intent to strengthen the BWC as part of his comprehensive strategy for combating terrorism. A BWC review conference, held every five years to consider ways of improving the Convention's effectiveness, will convene in Geneva beginning November 19. In anticipation of that meeting, the President has urged that all parties to the Convention enact strict national criminal legislation to crack down on prohibited biological weapons activities, and he has called for an effective United Nations procedures for investigation suspicious outbreaks of disease or allegations of biological weapons use. These steps are welcomed, but they are small. Even sweeping reforms, like creating a more stringent verification and enforcement regime, would not guarantee our safety. The robust verification and enforcement mechanisms in the CWC, for instance, have proven to be imperfect, and scientists agree that it is much easier to conceal the production of biological agents than chemical weapons. The inescapable fact, therefore, is that we cannot count on international regimes to prevent those who wish us ill from acquiring biological and chemical weapons. We must be prepared for the reality that these weapons could fall into the hands of terrorists, and could be used against Americans on American soil. And we must be prepared to treat the victims of such an attack if it were ever to occur. CDC Quarantine Plans On November 26 of last year, the Centers for Disease Control issued its interim working draft plan for responding to an outbreak of smallpox. The plan does not call for mass vaccination in advance of a smallpox outbreak because the risk of side effects from the vaccine outweighs the risks of someone actually being exposed to the smallpox virus. At the heart of the plan is a strategy sometimes called ``search and containment.'' This strategy involves identifying infected individual or individuals with confirmed smallpox, identifying and locating those people who come in contact with that person, and vaccinating those people in outward rings of contact. The goal is to produce a buffer of immune individuals and was shown to prevent smallpox and to ultimately eradicate the outbreak. Priorities would be set on who is vaccinated, perhaps focusing on the outward rings before those at the center of the outbreak. The plan assumes that the smallpox vaccination is effective for persons who have been exposed to the disease as long as the disease has not taken hold. In practice it may be necessary to set a wide perimeter for these areas because smallpox is highly contagious before it might be diagnosed. There may be many areas subject to search and containment because people in our society travel frequently and widely. Terrorists might trigger attacks in a wide range of locations to multiply the confusion and panic. The most common form of smallpox has a 30 percent mortality rate, but terrorists might be able to obtain supplies of ``flat-type'' smallpox with a mortality rate of 96 percent and hemorrhagic-type smallpox, which is almost always fatal. For these reasons, the CDC plan accepts the possibility that whole cities or other geographic areas could be cordoned off, letting no one in or out--a quarantine enforced by police or troops. The plan focuses on enforcement authority through police or National Guard, isolation and quarantine, mandatory medical examinations, and rationing of medicines. It includes a discussion of ``population-wide quarantine measures which restrict activities or limit movement of individuals [including] suspension of large public gatherings, closing of public places, restriction on travel [air, rail, water, motor vehicle, and pedestrian], and/or `cordon sanitaire' [literally a `sanitary cord' or line around a quarantined area guarded to prevent spread of disease by restricting passage into or out of the area].'' The CDC recommends that states update their laws to provide authority for ``enforcing quarantine measures'' and it recommends that States in ``pre-event planning'' identify personnel who can enforce these isolation and quarantine measures, if necessary.'' Guide C--Isolation and Quarantine, page 17. On October 23, 2001, the CDC published a ``Model State Emergency Health Powers Act.'' It was prepared by the Center for Law and the Public's Health at Georgetown and Johns Hopkins Universities, in conjunction with the National Governors Association, National Conference of State Legislatures, Association of State and Territorial Health Officials, National Association of City and County Health Officers, and National Association of Attorneys General. A copy of the model law is printed at www.publichealthlaw.net. The law would provide powers to enforce the ``compulsory physical separation (including the restriction of movement and confinement) of individuals and/or groups believed to have been exposed to or known to have been infected with a contagious disease from individuals who are believed not to have been exposed or infected, in order to prevent or limit the transmission of the disease to others.'' Federal law on this subject is very strong and the Administration can always rely on the President's Constitution authority as Commander in Chief. Let us try to imagine, however, what it would be like if a quarantine is imposed. Let us assume that there is not enough smallpox vaccine available for use in a large outbreak, that the priority is to vaccinate those in the outward rings of the containment area first, that the available vaccines cannot be quickly deployed inside the quarantined area, that it is not possible to quickly trace and identify all of the individuals who might have been exposed, and/or that public health workers themselves might be infected. We know that there is no medicine to treat those who do become infected. We know the mortality rates. It is not hard to imagine how much force might be necessary to enforce the quarantine. It would be quite unacceptable to permit individuals to leave the quarantined area no matter how much panic had taken hold. Think about how different this scenario would be if we had medicines that could effectively treat and cure those who become infected by smallpox. We still might implement the CDC plan but a major element of the strategy would be to persuade people to visit their local clinic or hospital to be dispensed their supply of medicine. We could trust that there would be a very high degree of voluntary compliance. This would give us more time, give us options if the containment is not successful, give us options to treat those in the containment area who are infected, and enable us to quell the public panic. Because we have no medicine to treat those infected by smallpox, we have to be prepared to implement a plan like the one CDC has proposed. Theirs is the only option because our options are so limited. We need to expand our range of options. the countermeasure research gap We should not be lulled by the apparent successes with Cipro and the strains of anthrax we have seen in the recent attacks. We have not been able to prevent death in some of the patients with late-stage inhalation anthrax and Robert Stevens, Thomas Morris, Jr., Joseph Curseen, Kathy Nguyen, and Ottilie Lundgren died. This legislation is named in honor of them. What we needed for them, and did not have, is a drug or vaccine that would treat late stage inhalation anthrax. As I have said, we need an effective treatment for those who become infected with smallpox. We have a vaccine that effectively prevents smallpox infection, and administering this vaccine within four days of first exposure has been shown to offer some protections against acquiring infection and significant protection against a fatal outcome. The problem is that administering the vaccine in this time frame to all those who might have been exposed may be exceedingly difficult. And once infection has occurred, we have no effective treatment options. In the last century 500 million people have died of smallpox--more than have from any other infectious disease--as compared to 320 million deaths in all the wars of the twentieth century. Smallpox was one of the diseases that nearly wiped out the entire Native American population in this hemisphere. The last naturally acquired case of smallpox occurred in Somalia in 1977 and the last case from laboratory exposure was in 1978. Smallpox is a nasty pathogen, carried in microscopic airborne droplets inhaled by its victims. The first signs are headache, fever, nausea and backache, sometimes convulsions and delirium. Soon, the skin turns scarlet. When the fever lets up, the telltale rash appears--flat red spots that turn into pimples, then big yellow pustules, then scabs. Smallpox also affects the throat and eyes, and inflames the heart, lungs, liver, intestines and other internal organs. Death often came from internal bleeding, or from the organs simply being overwhelmed by the virus. Survivors were left covered with pockmarks--if they were lucky. The unlucky ones were left blind, their eyes permanently clouded over. Nearly one in four victims died. The infection rate is estimated to be 25-40 percent for those who are unvaccinated and a single case can cause 20 or more additional infections. During the 16th Century, 3.5 million Aztecs--more than half the population--died of smallpox during a two-year span after the Spanish army brought the disease to Mexico. Two centuries later, the virus ravaged George Washington's troops at Valley Forge. And it cut a deadly path through the Crow, Dakota, Sioux, Blackfoot, Apache, Comanche and other American Indian tribes, helping to clear the way for white settlers to lay claim to the western plains. The epidemics began to subside with one of medicine's most famous discoveries: the finding by British physician Edward Jenner in 1796 that English milkmaids who were exposed to cowpox, a mild second cousin to smallpox that afflicts cattle, seemed to be protected against the more deadly disease. Jenner's work led to the development of the first vaccine in Western medicine. While later vaccines used either a killed or inactivated form of the virus they were intended to combat, the smallpox vaccine worked in a different way. It relied on a separate, albeit related virus: first cowpox and the vacinnia, a virus of mysterious origins that is believed to be a cowpox derivative. The last American was vaccinated back in the 1970s and half of the US population has never been vaccinated. It is not known how long these vaccines provide protection, but it is estimated that the term is 3-5 years. In an elaborate smallpox biowarfare scenario enacted in February 1999 by the Johns Hopkins Center for Civilians Biodefense Studies, it was projected that within two months 15,000 people had died, epidemics were out of control in fourteen countries, all supplies of smallpox vaccine were depleted, the global economy was on the verge of collapse, and military control and quarantines were in place. Within twelve months it was projected that eighty million people worldwide had died. A single case of smallpox today would become a global public health threat and it has been estimated that a single smallpox bioterror attack on a single American city would necessitate the vaccination of 30-40 million people. The U.S. government is now in the process of purchasing substantial stocks of the smallpox vaccine. We then face a very difficult decision on deploying the vaccine. We know that some individuals will have an adverse reaction to this vaccine. No one in the United States has been vaccinated against smallpox in twenty-five years. Those that were vaccinated back then may not be protected against the disease today. If we had an effective treatment for those who might become infected by smallpox, we would face much less pressure regarding deploying the vaccine. If we face a smallpox epidemic from a bioterrorism attack, we will have no Cipro to reassure the public and we will be facing a highly contagious disease and epidemic. To be blunt, it will make the current anthrax attack look benign by comparison. Smallpox is not the only threat. We have seen other epidemics in this century. The 1918 influenza epidemic provides a sobering admonition about the need for research to develop medicines. In two years, a fifth of the world's population was infected. In the United States the 1918 epidemic killed more than 650,000 people in a short period of time and left 20 million seriously ill, one fourth of the entire population. The average lifespan in the U.S. was depressed by ten years. In just one year, the epidemic killed 21 million human beings worldwide--well over twice the number of combat deaths in the whole of World War I. The flu was exceptionally virulent to begin with and it then underwent several sudden and dramatic mutations in its structure. Such mutations can turn flu into a killer because its victims' immune systems have no antibodies to fight off the altered virus. Fatal pneumonia can rapidly develop. Another deadly toxin, ricin toxin, was of interest to the al-Qaeda terrorist network. At an al-Qaeda safehouse in Saraq Panza, Kabul reporters found instructions for making ricin. The instructions make chilling reading. ``A certain amount, equal to a strong dose, will be able to kill an adult, and a dose equal to seven seeds will kill a child,'' one page reads. Another page says: ``Gloves and face mask are essential for the preparation of ricin. Period of death varies from 3-5 days minimum, 4-14 days maximum.'' The instructions listed the symptoms of ricin as vomiting, stomach cramps, extreme thirst, bloody diarrhoea, throat irritation, respiratory collapse and death. No specific treatment or vaccine for ricin toxin exists. Ricin is produced easily and inexpensively, highly toxic, and stable in aerosolized form. A large amount of ricin is necessary to infect whole populations--the amount of ricin necessary to cover a 100-km\2\ area and cause 50 percent lethality, assuming aerosol toxicity of 3 mcg/kg and optimum dispersal conditions, is approximately 4 metric tons, whereas only 1 kg of Bacillus anthracis is required. But it can be used to terrorize a large population with great effect because it is so lethal. Use of ricin as a terror weapon is not theoretical. In 1991 in Minnesota, 4 members of the Patriots Council, an extremist group that held antigovernmental and antitax ideals and advocated the overthrow of the U.S. government, were arrested for plotting to kill a U.S. marshal with ricin. The ricin was produced in a home laboratory. They planned to mix the ricin with the solvent dimethly sulfoxide (DMSO) and then smear it on the door handles of the marshal's vehicle. The plan was discovered, and the 4 men were convicted. In 1995, a man entered Canada from Alaska on his way to North Carolina. Canadian custom officials stopped the man and found him in possession of several guns, $98,000, and a container of white powder, which was identified as ricin. In 1997, a man shot his stepson in the face. Investigators discovered a makeshift laboratory in his basement and found agents such as ricin and nicotine sulfate. And, ricin was used by the Bulgarian secret police when they killed Georgi Markov by stabbing him with a poison umbrella as he crossed Waterloo Bridge in 1978. Going beyond smallpox, influenza, and ricin, we do not have an effective vaccine or treatment for dozens of other deadly and disabling agents and toxin. Here is a partial list of some of the other biological agents and chemical toxins for which we have no effective treatments: clostridium botulinum toxin (botulism), francisella tularensis (tularaemia), Ebola hemorrhagic fever, Marbug hemorrhagic fever, Lassa fever, Julin (Argentine hemorrhagic fever), Coxiella burnetti (Q fever), brucella species (brucellosis), burkholderia mallei (glanders), Venezuelan encephalomyelitis, eastern and western equine encephalomyelitis, epsilon toxin of clostridium perfringens, staphylococcus entretoxin B, salmonella species, shigella dysenteriae, escherichia coli O157:H7, vibrio cholerae, cryptosporidium parvum, nipah virus, hantaviruses, tickborne hemorrhagic fever viruses, tickborne encephalitis virus, yellow fever, nerve agents (tabun, sarin, soman, GF, and VX), blood agents (hydrogen cyanide and cyanogens chloride), blister agents (lewisite, nitrogenadn sulfur mustards, and phosgene oxime), heavy metals (arsenic, lead, and mercury), and volatile toxins (benzene, chloroform, trihalomethanes), pulmonary agents (Phosgene, chlorine, vinly chloride), and incapacitating agents (BZ). The naturally occurring forms of these agents and toxins are enough to cause concern, but we also know that during the 1980s and 1990s the Soviet Union conducted bioweapons research at forty-seven laboratories and testing sites, employed nearly fifty thousand scientists in the work, and that they developed genetically modified versions of some of these agents and toxins. The goal was to develop an agent or toxin that was particularly virulent or not vulnerable to available antibiotic. The United States has publicly stated that five countries are developing biological weapons in violation of the Biological Weapons convention, North Korea, Iraq, Iran, Syria, and Libya, and stated that additional countries not yet named (possibly including Russia, China, Israel, Sudan and Egypt) are also doing so as well. What is so insidious about biological weapons is that in many cases the symptoms resulting from a biological weapons attack would likely take time to develop, so an act of bioterrorism may go undetected for days or weeks. Affected individuals would seek medical attention not from special emergency response teams but in a variety of civilian settings at scattered locations. This means we will need medicines that can treat a late stage of the disease, long after the infection has taken hold. We must recognize that the distinctive characteristic of biological weapons is that they are living micro-organisms and are thus the only weapons that can continue to proliferate without further assistance one released in a suitable environment. The lethality of these agents and toxins, and the panic they can cause, is quite frightening. The capacity for terror is nearly beyond comprehension. We do not believe it is necessary to describe the facts here. Our point is simple: we need more than military intelligence, surveillance, and public health capacity. We also need effective medicines. We also need more powerful research tools that will enable us to quickly develop treatments for agents and toxins not on this or any other list. We need to do whatever it takes to be able to reassure the American people that hospitals and doctors have powerful medicines to treat them if they are exposed to biological agents or toxins, that we can contain an outbreak of an infectious agent, and that there is little to fear. To achieve this objective, we need to rely on the entrepreneurship of the biotechnology industry. direct government funding of research There is already some direct funding of research by the Defense Advanced Research Projects Agency (DARPA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC). This research should go forward. DARPA, for instance, has been described as the Pentagon's ``venture capital fund,'' its mission to provide seed money for novel research projects that offer the potential for revolutionary findings. Last year, DARPA's Unconventional pathogen Countermeasures program awarded contracts totalling $50 million to universities, foundations, pharmaceutical and biotechnology companies seeking new ways to fight biological agents and toxins. The Unconventional Pathogen Countermeasures program now funds 43 separate research efforts on anti-bacterials, anti-toxins, anti-virals, decontamination, external protection from pathogens, immunization and multi-purpose vaccines and treatments. A common thread among many of these undertakings is the goal of developing drugs that provide broad-spectrum protection against several different pathogents. This year, with a budget of $63 million, the program has received over 100 research proposals in the last two months alone. Some of this DARPA research is directed at developing revolutionary, broad-spectrum, medical countermeasures against significantly pathogenic products. This goal is to develop countermeasures that are versatile enough to eliminate biological threats, whether from natural sources or modified through bioengineering or other manipulation. The countermeasures would need the potential to provide protection both within the body and at the most common portals of entry (e.g., inhalation, ingestion, transcutaneous). The strategies might include defeating the pathogen's ability to enter the body, traverse the bloodstream or lymphatics, and enter target tissues; identifying novel pathogen vulnerabilities based on fundamental, critical molecular mechanisms of survival or pathogenesis (e.g., Type III secretion, cellular energetics, virulence modulation); constructing unique, robust vehicles for the delivery of countermeasures into or within the body; and modulating the advantageous and/or deleterious aspects of the immune response to significantly pathogenic microorganisms and/or the pathogenic products in the body. While DAPRA's work is specifically aimed at protecting our military personnell, the National Institutes of Health also spent $49.7 million in the last fiscal year to find new therapies for those who contract smallpox and on systems for detecting the disease. In recent years, NIH's research programs have sought to create more rapid and accurate diagnostics, develop vaccines for those at risk of exposure to biological agents, and improve treatment for those infected. Moreover, in the last fiscal year, the Centers for Disease Control has allocated $18 million to continue research on an anthrax vaccine and $22.3 million on smallpox research. Some companies are willing to enter into a research relationships funded by DARPA and other agencies to develop countermeasures. Relationships between the government and private industry can be very productive, but they can also involve complex issues reflecting the different cultures of government and industry. Some companies-- including some of the most enterpreneurial--might prefer to take their own initiative to conduct this research. Relationships with government entities involve risks, issues, and bureaucracy that are not present in relationships among biotechnology companies and between them and non- governmental partners. The Defense Departments Joint Vaccine Acquisition Program (JVAP) illustrates the problems with a government led and managed program. A report in December 2000 by a panel of independent experts found that the current program ``is insufficient and will fail'' and recommended it adopt an approach more on the model of a private sector effort. It needs to adopt ``industry practices,'' ``capture industry interest,'' ``implement an organizational alignment that mirrors the vaccine industry's short chain of command and decision making,'' ``adopt an industry-based management philosophy,'' and ``develop a sound investment strategy.'' It bemoaned the ``extremely limited'' input from industry in the JVAP program. It is clear from this experience that we should not rely exclusively on government funding of countermeasures research. We should take advantage of the entrepreneurial fervor, and the independence, of our biotechnology industry entrepreneurs. It is not likely that the government will be willing or able to provide sufficient funding for the development of the countermeasures we need. Some of the most innovative approaches to vaccines and medicines might not be funded with the limited funds available to the government. We need to provide incentives that will encourage every biotech company to review its research priorities and technology portfolio for its relevance and potential for countermeasure research. Some of this research is early stage, basic research that is being developed and considered only for its value in treating an entirely different disease. We need to kindle the imagination of biotechnology companies and their tens of thousands of scientists regarding countermeasure research. industry research on countermeasures My proposal would supplement direct Federal government funding of research with incentives that make it possible for private companies to form the capital to conduct this research on their own initiative, utilizing their own capital, and at their own risk--all for good business reasons going to their bottom line. The U.S. biotechnology industry, approximately 1,300 companies, spent $13.8 billion on research last year. Only 350 of these companies have managed to go public. The industry employs 124,000 (Ernest & Young data) people. The top five companies spent an average of $89,000 per employee on research, making it the most research-intensive industry in the world. The industry has 350 products in human clinical trials targeting more than 200 diseases. Losses for the industry were $5.8 billion in 2001, $5.6 billion in 2000, $4.4 billion in 1999, $4.1 billion in 1998, $4.5 billion in 1997, $4.6 billion in 1996, and similar amounts before that. In 2000 fully 38 percent of the public biotech companies had less than 2 years of funding for their research. Only one quarter of the biotech companies in the United States are publicly traded and they tend to be the best funded. There is a broad range of research that could be undertaken under this legislation. Vaccines could be developed to prevent infection or treat an infection from a bioterror attack. Broad-spectrum antibiotics are needed. Also, promising research has been undertaken on antitoxins that could neutralize the toxins that are released, for example, by anthrax. With anthrax it is the toxins, not the bacteria itself, that cause death. An antitoxin could act like a decoy, attaching itself to sites on cells where active anthrax toxin binds and then combining with normal active forms of the toxin and inactivating them. An antitoxin could block the production of the toxin. We can rely on the innovations of the biotech industry, working in collaboration with academic medical centers, to explore a broad range of innovative approaches. This mobilizes the entire biotechnology industry as a vital component of our national defense against bioterror weapons. incentives needed to spur research The legislation takes a comprehensive approach to the challenges the biotechnology industry faces in forming capital to conduct research on countermeasures. It includes capital formation tax incentives, guaranteed purchase funds, patent protections, and liability protections. We believe we will have to include each of these types of incentives to ensure that we mobilize the biotechnology industry for this urgent national defense research. Some of the tax incentives in this legislation, and both of the two patent incentives I have proposed, may be controversial. In our view, we can debate tax or patent policy as long as you want, but let's not lose track of the issue here--development of countermeasures to treat people infected or exposed to lethal and disabling bioterror weapons. We know that incentives can spur research. In 1983 we enacted the Orphan Drug Act to provide incentives for companies to develop treatments for rare diseases with small potential markets deemed to be unprofitable by the industry. In the decade before this legislation was enacted, fewer than 10 drugs for orphan diseases were developed and these were mostly chance discoveries. Since the Act became law, 218 orphan drugs have been approved and 800 more are in the pipeline. The Act provides 7 years of market exclusivity and a tax credit covering some research costs. The effectiveness of the incentives we have enacted for orphan disease research show us how much we can accomplish when we set a national priority for certain types of research. The incentives we have proposed differ from those set by the Orphan Drug Act. We need to maintain the effectiveness of the Orphan Drug Act and not undermine it by adding many other disease research targets. In addition, the tax credits for research for orphan drug research have no value for most biotechnology companies because few of them have tax liability with respect to which to claim the credit. This explains why we have not proposed to utilize tax credits to spur countermeasures research. It is also clear that the market for countermeasures is even more speculative than the market for orphan drugs and we need to enact a broader and deeper package of incentives. decision making on targets and registration of research The government determines which research is covered by the legislation and which companies qualify for the incentives for this research. No company is entitled to utilize the incentives until the government certifies its eligibility. These decisions are vested in the Secretary, Department of Homeland Security. In S. 1764, the decisions were vested in the White House Office of Homeland Security, but it is now likely that a Department will be created. I have strongly endorsed that concept and led the effort to enact the legislation forming the new Department. The legislation confers on the Secretary, in consultation with the Secretary of Defense and Secretary of Health and Human Services, authority to set the list of agents and toxins with respect to which the legislation and incentives applies. The Secretary determines which agents and toxins present a threat and whether the countermeasures are ``more likely'' to be developed with the application of the incentives in the legislation. The Secretary may determine that an agent or toxin does not present a threat or that countermeasures are not more likely to be developed with the incentives. It may determine that the government itself should fund the research and development effort and not rely on private companies. The Department is required to consider the status of existing research, the availability of non-countermeasure markets for the research, and the most effective strategy for ensuring that the research goes forward. The legislation includes an illustrative, non-binding list of fifty- four agents and toxins that might be included on the Secretary's list. The decisions of the Secretary are final and are not subject to judicial review. The Department then must provide information to potential manufacturers of these countermeasures in sufficient detail to permit them to conduct the research and determine when they have developed the needed countermeasure. It may exempt from publication such information as it deems to be sensitive. The Department also must specify the government market that will be available when a countermeasure is successfully developed, including the minimum number of dosages that will be purchased, the minimum price per dose, and the timing and number of years projected for such purchases. Authority is provided for the Department to make advance, partial, progress, milestone, or other payments to the manufacturers. The Department is responsible for determining when a manufacturer has, in fact, successfully developed the needed countermeasure. It must provide information in sufficient detail so that manufacturers and the government may determine when the manufacturer has successfully developed the countermeasure the government needs. If and when the manufacturer has successfully developed the countermeasure, it becomes entitled to the procurement, patent, and liability incentives in the legislation. Once the list of agents and toxins is set, companies may register with the Department their intent to undertake research and development of a countermeasure to prevent or treat the agent or toxin. This registration is required only for companies that seek to be eligible for the tax, purchase, patent, and liability provisions of the legislation. The registration requirement gives the Department vital information about the research effort and the personnel involved with the research, authorizes inspections and other review of the research effort, and the filing of reports by the company. The Secretary then may certify that the company is eligible for the tax, purchase, patent, and liability incentives in the legislation. It bases this certification on the qualifications of the company to conduct the countermeasure research. Eligibility for the purchase fund, patent and liability incentives is contingent on successful development of a countermeasure according to the standards set in the legislation, as determined by the Secretary. The legislation contemplates that a company might well register and seek certification with respect to more than one research project and become eligible for the tax, purchase, patent, and liability incentives for each. There is no policy rationale for limiting a company to one registration and one certification. This process is similar to the current registration process for research on orphan (rare) diseases. In that case, companies that are certified by the FDA become eligible for both tax and market exclusivity incentives. This process gives the government complete control on the number of registrations and certifications. This gives the government control over the cost and impact of the legislation on private sector research. diagnostics and research tools The registration and certification process applies to research to develop diagnostics and research tools, not just drugs and vaccines. Diagnostics are vital because healthcare professionals need to know which agent or toxin has been used in an attack. This enables them to determine which treatment strategy is likely to be most effective. We need quickly to determine which individuals have been exposed or infected, and to separate them from the ``worried well.'' it is likely in an attack that large numbers of individuals who have not been exposed or infected will flood into healthcare facilities seeking treatment. We need to be able to focus on those individuals who are at risk and reassure those who are not at risk. In terms of research tools, it is possible that we will face biological agents and chemical agents we have never seen before. As I've mentioned, the Soviet Union bioterror research focused in part on use of genetic modification technology to develop agents and toxins that currently-available antibiotics can not treat. Australian researchers accidentally created a modified mousepox virus, which does not affect humans, but it was 100 percent lethal to the mice. Their research focused on trying to make a mouse contraceptive vaccine for pest control. The surprise was that it totally suppressed the ``cell- medicated response''--the arm of the immune system that combats viral infection. To make matters worse, the engineered virus also appears unnaturally resistant to attempts to vaccinate the mice. A vaccine that would normally protect mouse strains that are susceptible to the virus only worked in half the mice exposed to the killer version. If bioterrorists created a human version of the virus, vaccination programs would be of limited use. This highlights the drawback of working on vaccines against bioweapons rather than treatments. With the advances in gene sequencing--genomics--we will know the exact genetic structure of a biological agent. This information in the wrong hands could easily be manipulated to design and possibly grow a lethal new bacterial and viral strains not found in nature. A scientist might be able to mix and match traits from different micoorganism-- called recombinant technology--to take a gene that makes a deadly toxin from one strain of bacteria and introduce it into other bacterial strains. Dangerous pathogens or infectious agents could be made more deadly, and relatively benign agents could be designed as major public health problems. Bacteria that cause diseases such as anthrax could be altered in such a way that would make current vaccines or antibiotics against them ineffective. It is even possible that a scientist could develop an organism that develops resistance to antibiotics at an accelerated rate. This means we need to develop technology--research tools--that will enable us to quickly develop a tailor-made, specific countermeasure to a previously unknown organism or agent. These research tools will enable us to develop a tailor-made vaccine or drug to deploy as a countermeasure against a new threat. The legislation authorizes companies to register and receive a certification making them eligible for the incentives in the bill for this vital research. Tax Incentives for Capital Formation The legislation includes four tax incentives to enable biotechnology and pharmaceutical companies to form capital to fund research and development of countermeasures. Companies must irrevocably elect only one of the incentives with regard to the countermeasure research. Four different tax incentives are available so that companies have flexibility in forming capital to fund the research. Each of the options comes with advantages and limitations that may make it appropriate or inappropriate for a given company or research project. We do not now know fully how investors and capital markets will respond to the different options, but we assume that companies will consult with the investor community about which option will work best for a given research project. Capital markets are diverse and investors have different needs and expectations. Over time these markets and investor expectations evolve. If companies register for more than one research project, they may well utilize different tax incentives for the different projects. Companies are permitted to undertake a series of discrete and separate research projects and make this election with respect to each project. They may only utilize one of the options with respect to each of these research projects. The first option is for the company to establish an R&D Limited Partnership to conduct the research. The partnership passes through all business deductions and credits to the partners. For example, under this arrangement, the research and development tax credits and depreciation deductions for the company may be passed by the corporation through to its partners to be used to offset their individual tax liability. These deductions and credits are then lost to the corporation. This alternative is available only to companies with less than $750,000,000 in paid-in capital. The second option is for the company to issue a special class of stock for the entity to conduct the research. The investors would be entitled to a zero capital gains tax rate on any gains realized on the stock held for at least three years. This is a modification of the current Section 1202 where only 50 percent of the gains are not taxed. This provision is adapted from legislation I have introduced, S. 1134, and introduced in the House by Representatives Dunn and Matsui (H.R. 2383). A similar bill has been introduced by Senator Collins, S. 455. This option also is available to small companies. The third and fourth options grant special tax credits to the company for the research. The first credit is for research conducted by the company and the other for research conducted at a teaching hospital or similar institution. Tax credits are available to any company, but they are only useful to a company with tax liability against which to claim the credit. Very few biotechnology companies receive revenue from product sales and therefore have no tax liability. Companies with revenue may be able to fund the research from retained earnings rather than secure funding from investors. A company that elects to utilize one of these incentives is not eligible to receive benefits of the Orphan Drug Tax Credit. Companies that can utilize tax credits--companies with taxable income and tax liability--might find the Orphan Credit more valuable. The legislation includes an amendment to the Orphan Credit to correct a defect in the current credit. The amendment has been introduced in the Senate as S. 1341 by Senators Hatch, Kennedy and Jeffords. The amendment simply states that the Credit is available starting the day an application for orphan drug status is filed, not the date the FDA finally acts on it. The amendment was one of many initiatives championed by Lisa J. Raines, who died on September 11 in the plane that hit the Pentagon, and the amendment is named in her honor. As we go forward in the legislative process, I hope we will have an opportunity to speak in more detail about the service of Ms. Raines on behalf of medical research, particularly on rare diseases. The guaranteed purchase fund, and the patent protections, and liability provisions described below provide an additional incentive for investors and companies to fund the research. Government Countermeasure Purchase Fund The market for countermeasures is speculative and small. This means that if a company successfully develops a countermeasure, it may not receive sufficient revenue on sales to justify the risk and expense of the research. This is why the legislation establishes a countermeasures purchase fund that will define the market for the products with some specificity before the research begins. The Secretary will set standards for which countermeasures it will purchase and define the financial terms of the purchase commitment. This will enable companies to evaluate the market potential of its research before it launches into the project. The specifications will need to be set with sufficient specificity so that the company--and its investors--can evaluate the market and with enough flexibility so that it does not inhibit the innovativeness of the researchers. This approach is akin to setting a performance standard for a new military aircraft. The legislation provides that the Secretary will determine whether the government will purchase more than one product per class. It might make sense--as an incentive--for the government to commit to purchasing more than one product so that many more than one company conducts the research. A winner-take-all system may well intimidate some companies and we may end up without a countermeasure to be purchased. It is also possible that we will find that we need more than one countermeasure because different products are useful for different patients. We may also find that the first product developed is not the most effective. The purchase commitment for countermeasures is available to any company irrespective of its paid-in capital. intellectual property protections Intellectual property protection of research is essential to biotechnology and pharmaceutical companies for one simple reason: they need to know that if they successfully develop a medical product another company cannot expropriate it. It's a simple matter of incentives. The patent system has its basis in the U.S. Constitution where the federal government is given the mandate to ``promote the progress of Science and the Useful Arts by securing for a limited time to Authors and Inventors the exclusive right to their respective Writings and Discoveries.'' In exchange for full disclosure of the terms of their inventions, inventors are granted the right to exclude others from making, using, or selling their inventions for a limited period of time. this quid pro quo provides investors with the incentive to invent. In the absence of the patent law, discoverable inventions would be freely available to anyone who wanted to use them and inventors would not be able to capture the value of their inventions or secure a return on their investments. The patent system strikes a balance. Companies receive limited protection of their inventions if they are willing to publish the terms of their invention for all to see. At the end of the term of the patent, anyone can practice the invention without any threat of an infringement action. During the term of the patent, competitors can learn from the published description of the invention and may well find a new and distinct patentable invention. The legislation provides two types of intellectual property protection. The first simply provides that the term of the patent on the countermeasure will be the term of the patent granted by the Patent and Trademark Office without any erosion due to delays in approval of the product by the Food and Drug Administration. The second provides that a company that successfully develops a countermeasure will receive a bonus of two years on the term of any patent held by that company. Companies must elect one of these two protections, but only small biotechnology companies may elect the second protection. Large, profitable pharmaceutical companies may elect only the first of the two options. The first protection against erosion of the term of the patent is an issue that is partially addressed in current law, the Hatch-Waxman Patent Term Restoration Act. That act provides partial protection against erosion of the term (length) of a patent when there are delays at the FDA in approving a product. The erosion occurs when the PTO issues a patent before the product is approved by the FDA. In these cases, the term of the patent is running but the company cannot market the product. The Hatch-Waxman Act provides some protections against erosion of the term of the patent, but the protections are incomplete. As a result, many companies end up with a patent with a reduced term, sometimes substantially reduced. The issue of patent term erosion has become more serious due to changes at the PTO in the patent system. The term of a patent used to be fixed at 17 years from the date the patent was granted by the PTO. It made no difference how long it took for the PTO to process the patent application and sometimes the processing took years, even decades. Under this system, there were cases where the patent would issue before final action at the FDA, but there were other cases where the FDA acted to approve a product before the patent was issued. Erosion was an issue, but it did not occur in many cases. Since 1995 the term of a patent has been set at 20 years from the date of application for the patent. This means that the processing time by the PTO of the application all came while the term of the patent is running. This gives companies a profound incentive to rush the patent through the PTO. (Under the old system, companies had the opposite incentive.) With patents being issued earlier by the PTO, the issue of erosion of patent term due to delays at the FDA is becoming more serious and more common. The provision in the legislation simply states that in the case of bioterrorism countermeasures, no erosion in the term of the patent will occur. The term of the patent at the date of FDA approval will be the same as the term of the patent when it was issued by the PTO. There is no extension of the patent, simply protections against erosion. Under the new 20 year term, patents might be more or less than 17 years depending on the processing time at the PTO, and all this legislation says is that whatever term is set by the PTO will govern irrespective of the delays at the FDA. This option is available to any company that successfully develops a countermeasure eligible to be purchased by the fund. The second option, the bonus patent term, is only available to small companies with less than $750,000,000 in paid-in capital. It provides that a company that successfully develops a countermeasure is entitled to a two-years extension of any patent in its portfolio. This does not apply to any patent of another company bought or transferred in to the countermeasure research company. I am well aware that this bonus patent term provision will be controversial with some. A company would tend to utilize this option if it owned the patent on a product that still had, or might have, market value at the end of the term of the patent. Because this option is only available to small biotechnology companies, most of whom have no product on the market, in most cases they would be speculating about the value of a product at the end of its patent. The company might apply this provision to a patent that otherwise would be eroded due to FDA delays or it might apply it to a patent that was not eroded. The result might be a patent term that is no longer than the patent term issued by the PTO. It all depends on which companies elect this option and which patent they select. In some cases, the effect of this provision might be to delay the entry onto the market of lower priced generics. This would tend to shift some of the cost of the incentive to develop a countermeasure to insurance companies and patients with an unrelated disease. My rationale for including the patent bonus in the legislation is simple: I want this legislation to say emphatically that we mean business, we are serious, and we want biotechnology companies to reconfigure their research portfolios to focus in part on development of countermeasures. The other provisions in the legislation are powerful, but they may not be sufficient. limitation on liability This proposal protects companies willing to take the risks of producing anti-terrorism products for the American public from potential losses incurred from lawsuits alleging adverse reactions to these products. It also preserves the right for plaintiffs to seek recourse for alleged adverse reactions in Federal District Court, with procedural and monetary limitations. Under the plan, the Secretary of HHS is required to indemnify and defend entities engaged in qualified countermeasure research through execution of ``indemnification and defense agreements.'' This protection is only available for countermeasures purchased under the legislation or to use of such countermeasures as recommended by the Surgeon General in the event of a public health emergency. An exclusive means of resolving civil cases that fall within the scope of the indemnification and defense agreements is provided with litigation rights for injured parties. Non-economic damages are limited to $250,000 per plaintiff and no punitive or exemplary damages may be awarded. Some have tried to apply the existing Vaccine Injury Compensation Program (VICP) to this national effort. That is inappropriate because that program will be extremely difficult to use, both administratively and scientifically. For example, it would take several years to develop the appropriate ``table'' that identifies a compensable injury. Companies will be liable during this process. Note that when VICP was created, there had been studies of what adverse reactions to mandated childhood vaccines had occurred and the table was based largely on this experience. Even so, it has taken years of effort, ultimately resulting in wholesale revisions to the table by regulation, to get the current table in place. For anti-bioterrorism products currently being developed, it will simply be impossible to construct a meaningful Vaccine Injury Table--there will be no experience with the product. miscellanelous provisions The legislation contains a series of provisions designed to enhance countermeasure research. The legislation provides for accelerated approval by the FDA of countermeasures developed under the legislation. In most cases, the products would clearly qualify for accelerated approval, but the legislation ensures that they will be reviewed under this process. It provides a statutory basis for the FDA approving countermeasures where human clinical trials are not appropriate or ethical. Rules regarding such products have been promulgated by the FDA. It grants a limited antitrust exemption for certain cooperative research and development of countermeasures. It provides incentives for the construction of biologics manufacturing facilities and research to increase the efficiency of current biologics manufacturing facilities. It enhances the synergy between our for-profit and not for profit biomedical research entities. The Bayh-Dole Act and Stevenson-Wydler Act form the legal framework for mutually beneficially partnerships between academia and industry. My legislation strengthens this synergy and these relationships with two provisions, one to upgrade the basic research infrastructure available to conduct research on countermeasures and the other to increase cooperation between the National Institutes of Health and private companies. Research on countermeasures necessitates the use of special facilities where biological agents can be handled safely without exposing researchers and the public to danger. Very few academic institutions or private companies can justify or capitalize the construction of these special facilities. The Federal government can facilitate research and development of countermeasures by financing the construction of these facilities for use on a fee-for-service basis. The legislation authorizes appropriations for grants to non-profit and for-profit institutions to construct, maintain, and manage up to ten Biosafety Level 3-4 facilities, or their equivalent, in different regions of the country for use in research to develop countermeasures. BSL 3-4 facilities are ones used for research on indigenous, exotic or dangerous agents with potential for aerosol transmission of disease that may have serious or lethal consequences or where the agents pose high risk of life-threatening disease, aerosol-transmitted lab infections, or related agents with unknown risk of transmission. The Director of the Office and NIH shall issue regulations regarding the qualifications of the researchers who may utilize the facilities. Companies that have registered with and been certified by the Director--to develop countermeasures under Section 5(d) of the legislation--shall be given priority in the use of the facilities. The legislation also reauthorizes a very successful NIH-industry partnership program launched in FY 2000 in Public Law 106-113. The funding is for partnership challenge grants to promote joint ventures between NIH and its grantees and for-profit biotechnology, pharmaceutical and medical device industries with regard to the development of countermeasures (as defined in Section 3 of the bill) and research tools (as defined in Section 4(d)(3) of the bill). Such grants shall be awarded on a one-for-one matching basis. So far the matching grants have focused on development of medicines to treat malaria, tuberculosis, emerging and resistant infections, and therapeutics for emerging threats. My proposal should be matched by reauthorization of the challenge grant program for these deadly diseases. The legislation also sets incentives for the development of adjuvents to enhance the potency, and efficacy of antigens in responding to a biological agent. It requires the new Department to issue annual reports on the effectiveness of this legislation and these incentives, and directs it to host an international conference each year on countermeasure research. calibration of incentives The legislation is carefully calibrated to provide incentives only where they are needed. This accounts for the choices in the legislation about which provisions are available to small biotechnology companies and large pharmaceutical companies. The legislation makes choices. It sets the priorities. It provides a dose of incentives and seeks a response in the private sector. We are attempting here to do something that has not been done before. This is uncharted territory. And it also an urgent mission. There may be cases where a countermeasure developed to treat a biological toxin or chemical agent will have applications beyond this use. A broad-spectrum antibiotic capable of treating many different biological agents may well have the capacity to treat naturally occurring diseases. This same issue arises with the Orphan Drug Act, which provides both tax and FDA approval incentives for companies that develop medicines to treat rare diseases. In some cases these treatments can also be used for larger disease populations. There are few who object to this situation. We have come to the judgment that urgency of this research is worth the possible additional benefits that might accrue to a company. In the context of research to develop countermeasures, I do not consider it a problem that a company might find a broader commercial market for a countermeasure. Indeed, it may well be the combination of the incentives in this legislation and these broader markets that drives the successful development of a countermeasure. If our intense focus on developing countermeasures, and research tools, provides benefits for mankind going well beyond terror weapons, we should rejoice. If this research helps us to develop an effective vaccine or treatment for AIDS, we should give the company the Nobel Prize for Medicine. If we do not develop a vaccine or treatment for AIDS, we may see 100 million people die of AIDS. We also have 400 million people infected with malaria and more than a million annual deaths. Millions of children die of diarrhea, cholera and other deadly and disabling diseases. Countermeasures research may deepen our understanding of the immune system and speed and development of treatments for cancer and autoimmune diseases. That is not the central purpose of this legislation, but it is also an additional rationale for it. conclusion This issue raised by my legislation is very simple: do we want the Federal government to fund and supervise much of the research to develop countermeasures or should we also provide incentives that make it possible for the private sector, at its own expense, and at its own risk, to undertake this research for good business reasons. This Frist- Kennedy law focuses effectively on direct Federal funding and coordination issues, but it does not include the sufficient incentives for the private sector to undertake this research on its own initiative. That law and my legislation are perfectly complimentary. We need to enact both to ensure that we are prepared for bioterror attacks. I ask unanimous consent that an outline of the legislation appear at this point in the Record. Biological, Chemical and Radiological Weapons Countermeasures Research Act of 2002 The legislation, a refined version of S. 1764 introduced on December 4, 2001, proposes incentives that will enable biotechnology and pharmaceutical companies to take the initiative--for good business reasons--to conduct research to develop countermeasures, including diagnostics, drugs, and vaccines, to treat those who might be exposed to or infected by biological, chemical or radiological agents and materials in a terror attack. The premise of this legislation is that direct government funding of this research is likely to be much more expensive to the government and less likely to produce the countermeasures we need to defend America. Shifting some of the risk and expense of this research to entrepreneurial private sector firms is likely to be less expensive to the government and much more likely to produce the countermeasures we need to protect ourselves in the event of an attack. For biotechnology companies, incentives for capital formation are needed because most such companies have no approved products or revenue from product sales to fund research. They rely on investors and equity capital markets to fund the research. These companies must focus on research that will lead to product sales and revenue and end their dependence on investor capital. When they are able to form the capital to fund research, biotech companies tend to be innovative and nimble and focused on the intractable diseases for which no effective medical treatments are available. Special research credits for pharmaceutical companies are also needed. For both biotech and pharmaceutical companies, there is no established or predictable market for these countermeasures. Investors and companies are justifiable reluctant to fund this research, which will present technical challenges similar in complexity to development of effective treatments for AIDS. Investors and companies need assurances that research on countermeasures has the potential to provide a rate of return commensurate with the risk, complexity and cost of the research, a rate of return comparable to that which may arise from a treatment for cancer, MS, Cystic Fibrosis and other major diseases or from other investments. The legislation provides tax incentives to enable companies to form capital to conduct the research and tax credits usable by larger companies with tax liability with respect to which to claim the credits. It provides a guaranteed and pre- determined market for the countermeasures and special intellectual property protections to serve as a substitute for a market. Finally, it establishes liability protections for the countermeasures that are developed. Specifics of the legislation are as follows: (1) Setting Research Priorities (Section 101): The Department of Homeland Security sets the countermeasure research priorities in advance. It focuses the priorities on threats for which countermeasures are needed, and with regard to which the incentives make it ``more likely'' that the private sector will conduct the research to develop countermeasures. It is required to consider the status of existing research, the availability of non-countermeasure markets for the research, and the most effective strategy for ensuring that the research goes forward. The Department then provides information to potential manufacturers of these countermeasures in sufficient detail to permit them to conduct the research and determine when they have developed the needed countermeasure. The Department is responsible for determining when a manufacturer has, in fact, successfully developed the needed countermeasure. (2) Registration of Companies (Section 102): Biotechnology and pharmaceutical companies register with the Department to become eligible for the incentives in the legislation. They are obligated to provide reports to the Department as requested and be open to inspections. The Department certifies with companies are eligible for the incentives. Once a company is certified as eligible for the incentives, it becomes eligible for the tax incentives for capital formation, and if it successfully develops a countermeasure that meets the specifications of the Department, it becomes eligible for the procurement, patent, and liability provisions. (3) Diagnostics (Section 103): The incentives apply to development of diagnostics, as well as drugs, vaccines and other needed countermeasures. (4) Research tools (Section 104): A company is also eligible for certification for the tax and patent provisions if it seeks to develop a research tool that will make it possible to quickly develop a countermeasure to a previously unknown agent or toxin, or an agent or toxin not targeted by the Department for research. (5) Capital Formation for Countermeasure Research (Section 201): The legislation provides that a company seeking to fund research is eligible to elect from among four tax incentives. The companies are eligible to: (a) Establish an R&D Limited Partnership to conduct the research. The partnership passes through all business deductions and credits to the partners. Section 201 (b)(1). (b) Issue a special class of stock for the entity to conduct the research. The investors would be entitled to a zero capital gains tax rate on any gains realized on the stock. Section 201(b)(2). (c) Receive a special tax credit to help fund the research. Section 201 (b)(3). (d) Receive a special tax credit for research conducted at a non-profit and academic research institution. Section 201 (b)(4). A company must elect only one of these incentives and, if it elects one of these incentives, it is then not eligible to receive benefits under the Orphan Drug Act. The legislation includes amendments (Section 218) to the Orphan Drug Act championed by Senators Hatch, Kennedy and Jeffords (S. 1341). the amendments make the Credit available from the date of the application for Orphan Drug status, not the date the application is approved as provided under current law. (6) Countermeasure Purchase Fund (Section 202): The legislation provides that a company that successfully develops a countermeasure--through FDA approval--is eligible to sell the product to the Federal government at a pre- established price and in a pre-determined amount. The company is given notice of the terms of the sale before it commences the research. (7) Intellectual Property Incentives (Section 203): The legislation provides that a company that successfully develops a countermeasure is eligible to elect one of two patent incentives. The two alternatives are as follows: (a) The company is eligible to receive a patent for its invention with a term as long as the term of the patent when it was issued by the Patent and Trademark Office, without any erosion due to delays in the FDA approval process. This alternative is available to any company that successfully develops a countermeasure irrespective of its paid-in capital. (b) The company is eligible to extend the term of any patent owned by the company for two years. The patent may not be one that is acquired by the company from a third party. This is included as a capital formation incentive for small biotechnology companies with less than $750 million in paid- in capital, or, at the discretion of the Department of Homeland Security, to any firm that successfully develops a countermeasure. In addition, a company that successfully develops a countermeasure is eligible for a 10 year period of market exclusivity on the countermeasure. (8) Liability Protections (Section 204): The legislation provides for protections against liability for the company that successfully develops a countermeasure. (9) Accelerated Approval of Countermeasure (Section 211): The countermeasures are considered for approval by the FDA on a ``fast track'' basis. (10) Special Approval Standards (Section 212): The countermeasures may be approved in the absence of human clinical trails if such trails are impractical or unethical. (11) Limited Antitrust Exemption (Section 213): Companies are granted a limited exemption from the antitrust laws as they seek to expedite research on countermeasures. (12) Biologics Manufacturing Capacity and Efficiency (Sections 214-215): Special incentives are incorporated to ensure that manufacturing capacity is available for countermeasures. (13) Strengthening of Biomedical Research Infrastructure: Authorizes appropriations for grants to construct specialized biosafety containment facilities where biological agents can be handled safely without exposing researchers and the public to danger (Section 216). Also reauthorizes a successful NIH- industry partnership challenge grants to promote joint ventures between NIH and its grantees and for-profit biotechnology, pharmaceutical and medical device industries with regard to the development of countermeasures and research tools (Section 217). (14) Adjuvents (Section 219): The legislation provides incentives for the development and use of adjuvents to enhance the potency of countermeasures. (15) Annual Report (Section 220): The Department is required to prepare for the Congress an annual report on the implementation of these incentives. (16) International Conference (Section 221): The Department is required to organize an annual international conference on countermeasure research.

Mr. LIEBERMAN

Mr. LIEBERMAN. Again, let me thank Senator Hutchison in particular for her efforts on this bill. I believe we have worked out a good compromise, one that grants relief where it is warranted, but does not in any way threaten to open up a loophole in the law. I thank her for that, and I yield the floor. Exhibit 1

Mr. LIEBERMAN. Mr. President, I am very pleased that the Senate today is passing H.R. 5596, a compromise bill aimed at improving disclosure by Section 527 political organizations and relieving certain 527 organizations from arguably duplicative filing requirements. I want to thank my colleague, Senator Hutchison, as well as our colleagues in the House, for working steadfastly with us to draft this bill in a manner that achieves its purpose, but does not open any loopholes in the original section 527 reform law. In June 2000, Congress passed the first significant campaign finance reform measure in a quarter of a century. The so-called Section 527 reform bill dealt with a truly troubling development, one whereby organizations that received tax-exempt status by telling the IRS that they exist to influence elections denied the very same thing to the FEC.As a result, these self-proclaimed election organizations engaged in election activity without complying with any aspect of the election laws, influencing our elections without the American public having any idea who--or what--was behind them. The 527 reform law enacted in 200 put a stop to that, by requiring organizations claiming tax-exempt status under Section 527 of the Internal Revenue Code to do three things: (1) give notice of their intent to claim that status; (2) disclose information about their large contributors and their big expenditures; and (3) file annual informational returns along the lines of those filed by virtually all other tax-exempt organizations. During the approximately two years that the 527 reform law has been in effect, that law has blasted sunshine onto the previously shadowy operations of a multitude of election-related organizations. Through the filings Section 527 now mandates, the American public has learned a great deal about who is financing many of these organizations and how these organizations are spending their money. As outlined in report issued earlier this year by the group Public Citizen, the 527 reform law brought us the knowledge that 25 of the largest 527s raised over $67 million between July 2000 and December 2001, and that they spent it on a plethora of campaign activities--most significantly those pre- election issue ads that we all know so well and that are often indistinguishable from candidate ads. We've also learned from these IRS filings the specifics about who was trying to influence particular elections and where their money came from. Were it not for the 527 disclosure law, we probably wouldn't have any of this information, and we probably would have had a lot more shadowy groups operating in the election system--ones that slithered away on their own because they didn't want to face the disinfectant of sunshine. These filings will become all the more important come this November, when the Bipartisan Campaign Reform Act--the McCain-Feingold bill--goes into effect. As we all know, at least some of the soft money donors who will no longer be able to give to political parties will be looking for other ways to influence our elections. Donations to 527 groups will probably top many of their lists, because these are the only tax-exempt groups that can do as much election work as they want without jeopardizing their tax status. With the potential for all this new money coming in, it is critical that we have a healthy 527 disclosure regime in place. Although the 2000 law has been a tremendous boon in the fight for clean and open elections, the 527 disclosure regime does have some problems. Public interest groups that use the disclosure reports tell us that those reports lack important information needed to understand 527s' activities, and, more importantly, that the reports are hard to access and analyze. A new report by the nonpartisan Campaign Finance Institute's blue ribbon Task Force on Disclosure, for example, concludes that ``there is a serious lack of meaningful web disclosure'' by the IRS of 527 group activities, and calls upon Congress to mandate a fully searchable database and electronic filing. Put simply, the public needs more information to be reported and it needs the IRS to provide better access to it. Just as importantly, concerns have been raised about the law's impact on State and local political organizations that already fully disclose to the public all of the activities covered by the 527 reform law. When we first enacted the 527 reform law, we made clear that we believed that 527 organizations, as a condition of receiving the federal benefit of tax exemption, owed the public disclosure of certain information about themselves and their activities. A number of State and local political organization have now convinced us that they already disclose that information on the State level, thereby already serving the law's purpose, and that there is no reason to require them to report the same information again to the IRS. The bill we are considering today seeks to comprehensively address all these problems. First, it makes important and necessary improvements to the reporting and disclosure requirements, to enable the public to have better access to more information. For example, organizations will have to provide more information about the contributions they receive and the expenditures they make--providing the dates of both them, as well as the purpose of their expenditures. The added requirement to state the purpose of an expenditure will be particularly helpful in allowing the public to see whose money is supporting particular candidates. I hope that in implementing this provision, the IRS makes clear that organizations should state the purposes of expenditures with specificity, including whether particular expenditures are in support of, or opposition to, particular candidates, as well as the name and office sought by any such candidates. The bill we are considering today also requires 527s to provide updated information on themselves if there is any material change in the basic identifying information they filed with the IRS. This important change will make sure that the public can at all times locate these groups and know who is running them. At the same time, as we are improving the nature of the filings, we are also mandating better disclosure of them. From here forward, all 527 filing reports on their contributors and expenditures will have to do so electronically, and the IRS will have to make those reports searchable on, and downloadable from, the Internet. This will vastly improve the public's access to information about, and understanding of, 527 organizations and their activities. The second major feature of this bill is its elimination of arguably duplicative reporting requirements. In particular, it grants relief from the 527 reform law to a number of organizations that focus on State and local elections and that are regulated by State disclosure laws. First, the bill fully exempts from its mandates State and local candidate and party committees. Under the reform law, these committees must notify the IRS of their intent to claim Section 527 status, and they have to file annual information returns if they have over $25,000 in gross receipts. They do not, however, have to file contribution and expenditure reports. Since the reform law went into effect, we have become convinced that the burden imposed on these committees by the two relevant disclosure mandates outweigh the public purpose served by requiring them to comply with these mandates. By exempting them from the contribution and expenditures reporting requirements that lie at the heart of the Section 527 law's disclosure regime, the original reform law recognized that State and local candidate and party committees do not generally pose the threats the 527 law intended to address. In contract to other political committees, there is never any doubt as to who is running these committees or whose agenda they aim to promote. Just as importantly, State laws regulate and require disclosure from all of these committees. Different considerations apply to the case of so-called State and local PACs. The bill grants more limited relief to a carefully defined set of these groups. In granting this relief, we have walked a very fine line. On one hand, we want to recognize the fact that every State requires disclosure from political committees involved in that State's elections and that many State and local PACs covered by the 527 reform law therefore are already disclosing the information the 527 law seeks. On the other hand, we still believe that there is a strong public interest in knowing how the federal tax-exemption under Section 527 is being used by these organizations, and we most decidedly do not want to exempt from the law's disclosure requirements any State or local PAC that does not otherwise publicly disclose all of its activities. To exempt a State or local PAC merely it claims that it is involved only in State elections and files information about some of its activities with a State agency would risk creating a massive loophole that could undermine the 527 reform law. That is because just as prior to the passage of the 527 reform law, some 527 groups were claiming that they were trying to influence elections for the purposes of the tax code, but not for the purposes of the election laws, a broad exemption for State or local PACs could lead some groups to claim that they are influencing State elections for the purposes of Section 527 but not for the purposes of the State disclosure laws. So, we have reached the following compromise. First, we are not exempting any of these organizations from the Section 527(i) requirement to notify the IRS of the intention to claim Section 527 status. Unlike candidate and party committees, it is not always clear to the public who is behind these groups or what their purposes are, making the information filed in these notices important sources of otherwise unavailable information. Moreover, because we are not completely exempting these groups from the law's other disclosure requirements, the notice requirement will be critical in helping the IRS and outside groups monitor compliance with the law's other mandates. In light of that, we believe the minimal effort required to file the 527(i) notice is worth the tremendous value of giving the public some basic information about these groups. Second, we are granting an exemption from the Section 527(j) contribution and expenditure reporting requirements to some of these organizations, but only if they can meet certain strict requirements. The group's so-called exempt function activity must focus exclusively on State or local elections; a group that engages in even the smallest amount of activity related to a federal election will not be entitled to this exemption. The group also must file with a State agency information on every contribution and expenditure it would otherwise be required to disclose to the IRS. This requirement ensures that Congress' conditioning of tax exemption on complete and full disclosure is not compromised. In addition, these State filings must be pursuant to a State law that requires these groups to file the State reports; this requirement seeks to prevent organizations from hiding truly federal activity by voluntarily reporting to a State where reports may not be as readily accessible as are federal reports. Moreover, no group will be able to take advantage of this exemption if the State reports its files are not publically available both from the State agency with which the report is filed and from the group itself. Finally, this exemption also is not available to any organization in which a candidate for federal office or someone who holds elected federal office plays a role--whether through helping to run the organization, soliciting money for the organization or deciding how the organization spends its money. I should note here that the use of the word ``solicit'' in this case is meant broadly; if a federal candidate or office holder suggests that money be given to a committee or directs it there in anyway, then federal disclosure is mandated. In short, this bill exempts from Section 527(j)'s contribution and expenditure reporting obligations only those groups that truly and legitimately engage in exclusively State and local activity and only when they already report to their State on all of the information the 527 law seeks. This latter condition is important not just because it precludes the hiding of federal activity, but also because we believe that even those groups involved in exclusively State and local elections should face some disclosure requirement if they are to take the federal benefit of tax exemption under Section 527. Finally, the bill makes a small change to these State and local groups' obligation to file an annual information return when they do not have taxable income. Under the current law, they must file such returns when they have $25,000 in annual receipts; the bill increases that trigger to $100,000. Like all other 527 organizations, though, they still will have to file such returns if they have taxable income. To help walk my colleagues through this bill, I am attaching at the end of my statement a section-by-section of the bill and ask unanimous consent that it be printed in the Record after my statement.

Mr. LIEBERMAN

Mr. LIEBERMAN. Mr. President, America has a major flaw in its defenses against bioterrorism. Hearings I chaired in the Governmental Affairs Committee on bioterrorism demonstrated that America has not made a national commitment to research and development of treatments and cures for those who might be exposed to or infected by a biological agent, chemical toxin, or radiological material. Correcting this critical gap is the purpose of legislation we are introducing today. This legislation is a refined and upgraded version of legislation I introduced last year (S. 1764, December 4, 2001) and I am delighted that Senator Hatch has joined me as the lead cosponsor of the new bill. Obviously, our first priority must be to attempt to prevent the use of these agents and toxins by terrorists, quickly assess when an attack has occurred, take appropriate public health steps to contain the exposure, stop the spread of contagion, and then detoxify the site. These are all critical functions, but in the end we must recognize that some individuals may be exposed or infected. Then the critical issue is whether we can treat and cure them and prevent death and disability. In short, we need a diversified portfolio of medicines. In cases where we have ample advance warning of an attack and specific information about the agent, toxin, or material, we may be able to vaccinate the vulnerable population in advance. In other cases, even if we have a vaccine, we might well prefer to use medicines that would quickly stop the progression of the disease or the toxic effects. We also need a powerful capacity quickly to develop new countermeasures where we face a new agent, toxin, or material. Unfortunately, we are woefully short of vaccines and medicines to treat individuals who are exposed or infected. We have antibiotics that seem to work for most of those infected in the current anthrax attack, but these have not prevented five deaths. We have no effective vaccines or medicines for most other biological agents and chemical toxins we might confront. We have very limited capacity to respond medically to a radiological attack. In some cases we have vaccines to prevent, but no medicines to treat, an agent. We have limited capacity to speed the development of vaccines and medicines to prevent or treat novel agents and toxins not currently known to us. We have provided, and should continue to provide, direct Federal funding for research and development of new medicines, however, this funding is unlikely to be sufficient. Even with ample Federal funding, many private companies will be reluctant to enter into agreements with government agencies to conduct this research. Other companies would be willing to conduct the research with their own capital and at their own risk but are not able to secure the funding from investors. The legislation we introduce today would provide incentives for private biotechnology companies to form capital to develop countermeasures--medicines--to prevent, treat and cure victims of bioterror, chemical and radiological attacks. This will enable this industry to become a vital part of the national defense infrastructure and do so for business reasons that make sense for their investors on the bottom line. Enactment of these incentives is necessary because most biotech companies have no approved products or revenue from product sales to fund research. They rely on investors and equity capital markets to fund the research. They must necessarily focus on research that will lead to product sales and revenue and, thus, to an end to their dependence on investor capital. There is no established or predictable market for countermeasures. These concerns are shared by pharmaceutical firms. Investors are justifiably reluctant to fund this research, which will present challenges similar in complexity to AIDS. Investors need assurances that research on countermeasures has the potential to provide a rate of return commensurate with the risk, complexity and cost of the research, a rate of return comparable to that which may arise from a treatment for cancer, MS, Cystic Fibrosis and other major diseases. It is in our national interest to enlist these companies in the development of countermeasures as biotech companies tend to be innovative and nimble and intently focused on the intractable diseases for which no effective medical treatments are available. The incentives we have proposed are innovative and some may be controversial. We invite everyone who has an interest and a stake in this research to enter into a dialogue about the issue and about the nature and terms of the appropriate incentives. We have attempted to anticipate the many complicated technical and policy issues that this legislation raises. The key focus of our debate should be how, not whether, we address this critical gap in our public health infrastructure and the role that the private sector should play. Millions of Americans will be at risk if we fail to enact legislation to meet this need. relationship to bioterrorism preparedness legislation My proposal is complimentary to legislation on bioterrorism preparedness we enacted earlier this year. That law, Bioweapons Preparedness Act, focuses on many needed improvements in our public health infrastructure. These investments provide the infrastructure where we could deploy the countermeasures that could be developed pursuant to the incentives proposed in my legislation. Among the provisions in the Frist-Kennedy law are initiatives regarding bioterrorism preparedness capacities, improvements in communications about bioterrorism, protection of children, protection of food safety, and global pathogen surveillance and response. We need to fully fund these new programs and capacities. My legislation builds on these provisions by providing incentives to enable the biotechnology industry acting on its own initiative to fund and conduct research on countermeasures. It includes tax, procurement, intellectual property and liability incentives. Accordingly, my proposal raises issues falling within the jurisdiction of the HELP, Finance, and Judiciary Committees. The Frist-Kennedy law and my bill are complimentary. The bottom line is that we need both bills--one focusing on public health and one focusing on medical research. Without medical research, public health workers will not have the single most important tool to use in an attack--medicine to prevent death and disability and medicine that will help us avoid public panic. Cipro as a Countermeasure We are fortunate that we have broad-spectrum antibiotics, including Cipro, to treat the type of anthrax to which so many have been exposed. This treatment seems to be effective before the anthrax symptoms become manifest, and effective to treat cutaneous anthrax, and we have been able to effectively treat some individuals who have inhalation anthrax. I am thankful that this drug exists to treat those who have been exposed, including my own Senate staff. Our offices are immediately above those of Senator Daschle. We have seen how reassuring it is that we have an effective treatment for this biological agent. We see long lines of Congressional staffers and postal workers awaiting their Cipro. Think what it would be like if we could only say, ``We have nothing to treat you and hope you don't contract the disease.'' Think of the public panic that we might see. I am grateful that this product exists and proud of the fact that the Bayer Company is based in Connecticut. The last thing we should be doing is criticizing this company for their research success. The company has dispensed millions of dollars worth of Cipro free of charge. Criticizing it for the price that it charges tells other research companies that the more valuable their products are in protecting the public health, the more likely they are to be criticized and bullied. It is fortuitous that Cipro seems to be effective against anthrax. The product was not developed with this use in mind. My point with this legislation is we cannot rely on good fortune and chance in the development of countermeasures. We need to make sure that these countermeasures will be developed. We need more companies like Bayer, we need them focused specifically on developing medicines to deal with the new bioterror threat, and we need to tell them that there are good business reasons for this focus. We also are fortunate to have an FDA-licensed vaccine, made by BioPort Corporation, that is recommended by our country's medical experts at the DOD and CDC for pre-anthrax exposure vaccination of individuals in the military and some individuals in certain laboratory and other occupational settings where there is a high risk of exposure to anthrax. This vaccine is also recommended for use with Cipro after exposure to anthrax to give optimal and long-lasting protection. That vaccine is not now available for use. We must do everything necessary to make this and other vaccines available in adequate quantities to protect against future attacks. The point of this legislation is that we need many more Cipro-like and anthrax vaccine-like products. That we have these products is the good news; that we have so few others is the problem. Biological Weapons Convention One unfortunate truth in this debate is that we cannot rely upon international legal norms and treaties alone to protect our citizens from the threat of biological or chemical attack. The United States ratified the Biological and Toxin Weapons Convention (BWC) on January 22, 1975. That Convention now counts 144 nations as parties. Twenty-two years later, on April 24, 1997, the United States Senate joined 74 other countries when it ratified the Chemical Weapons Convention (CWC). While these Conventions serve important purposes, they do not in any way guarantee our safety in a world with rogue states and terrorist organizations. The effectiveness of both Conventions is constrained by the fact that many countries have failed to sign on to either of them. Furthermore, two signatories of the BWC, Iran and Iraq, are among the seven governments that the Secretary of State has designated as state sponsors of international terrorism, and we know for a fact that they have both pursued clandestine biological weapons programs. The BWC, unlike the CWC, has no teeth--it does not include any provisions for verification or enforcement. Since we clearly cannot assume that any country that signs on to the Convention does so in good faith, the Convention does so in good faith, the Convention's protective value is limited. On November 1 of 2001, the President announced his intent to strengthen the BWC as part of his comprehensive strategy for combating terrorism. A BWC review conference, held every five years to consider ways of improving the Convention's effectiveness, will convene in Geneva beginning November 19. In anticipation of that meeting, the President has urged that all parties to the Convention enact strict national criminal legislation to crack down on prohibited biological weapons activities, and he has called for an effective United Nations procedures for investigation suspicious outbreaks of disease or allegations of biological weapons use. These steps are welcomed, but they are small. Even sweeping reforms, like creating a more stringent verification and enforcement regime, would not guarantee our safety. The robust verification and enforcement mechanisms in the CWC, for instance, have proven to be imperfect, and scientists agree that it is much easier to conceal the production of biological agents than chemical weapons. The inescapable fact, therefore, is that we cannot count on international regimes to prevent those who wish us ill from acquiring biological and chemical weapons. We must be prepared for the reality that these weapons could fall into the hands of terrorists, and could be used against Americans on American soil. And we must be prepared to treat the victims of such an attack if it were ever to occur. CDC Quarantine Plans On November 26 of last year, the Centers for Disease Control issued its interim working draft plan for responding to an outbreak of smallpox. The plan does not call for mass vaccination in advance of a smallpox outbreak because the risk of side effects from the vaccine outweighs the risks of someone actually being exposed to the smallpox virus. At the heart of the plan is a strategy sometimes called ``search and containment.'' This strategy involves identifying infected individual or individuals with confirmed smallpox, identifying and locating those people who come in contact with that person, and vaccinating those people in outward rings of contact. The goal is to produce a buffer of immune individuals and was shown to prevent smallpox and to ultimately eradicate the outbreak. Priorities would be set on who is vaccinated, perhaps focusing on the outward rings before those at the center of the outbreak. The plan assumes that the smallpox vaccination is effective for persons who have been exposed to the disease as long as the disease has not taken hold. In practice it may be necessary to set a wide perimeter for these areas because smallpox is highly contagious before it might be diagnosed. There may be many areas subject to search and containment because people in our society travel frequently and widely. Terrorists might trigger attacks in a wide range of locations to multiply the confusion and panic. The most common form of smallpox has a 30 percent mortality rate, but terrorists might be able to obtain supplies of ``flat-type'' smallpox with a mortality rate of 96 percent and hemorrhagic-type smallpox, which is almost always fatal. For these reasons, the CDC plan accepts the possibility that whole cities or other geographic areas could be cordoned off, letting no one in or out--a quarantine enforced by police or troops. The plan focuses on enforcement authority through police or National Guard, isolation and quarantine, mandatory medical examinations, and rationing of medicines. It includes a discussion of ``population-wide quarantine measures which restrict activities or limit movement of individuals [including] suspension of large public gatherings, closing of public places, restriction on travel [air, rail, water, motor vehicle, and pedestrian], and/or `cordon sanitaire' [literally a `sanitary cord' or line around a quarantined area guarded to prevent spread of disease by restricting passage into or out of the area].'' The CDC recommends that states update their laws to provide authority for ``enforcing quarantine measures'' and it recommends that States in ``pre-event planning'' identify personnel who can enforce these isolation and quarantine measures, if necessary.'' Guide C--Isolation and Quarantine, page 17. On October 23, 2001, the CDC published a ``Model State Emergency Health Powers Act.'' It was prepared by the Center for Law and the Public's Health at Georgetown and Johns Hopkins Universities, in conjunction with the National Governors Association, National Conference of State Legislatures, Association of State and Territorial Health Officials, National Association of City and County Health Officers, and National Association of Attorneys General. A copy of the model law is printed at www.publichealthlaw.net. The law would provide powers to enforce the ``compulsory physical separation (including the restriction of movement and confinement) of individuals and/or groups believed to have been exposed to or known to have been infected with a contagious disease from individuals who are believed not to have been exposed or infected, in order to prevent or limit the transmission of the disease to others.'' Federal law on this subject is very strong and the Administration can always rely on the President's Constitution authority as Commander in Chief. Let us try to imagine, however, what it would be like if a quarantine is imposed. Let us assume that there is not enough smallpox vaccine available for use in a large outbreak, that the priority is to vaccinate those in the outward rings of the containment area first, that the available vaccines cannot be quickly deployed inside the quarantined area, that it is not possible to quickly trace and identify all of the individuals who might have been exposed, and/or that public health workers themselves might be infected. We know that there is no medicine to treat those who do become infected. We know the mortality rates. It is not hard to imagine how much force might be necessary to enforce the quarantine. It would be quite unacceptable to permit individuals to leave the quarantined area no matter how much panic had taken hold. Think about how different this scenario would be if we had medicines that could effectively treat and cure those who become infected by smallpox. We still might implement the CDC plan but a major element of the strategy would be to persuade people to visit their local clinic or hospital to be dispensed their supply of medicine. We could trust that there would be a very high degree of voluntary compliance. This would give us more time, give us options if the containment is not successful, give us options to treat those in the containment area who are infected, and enable us to quell the public panic. Because we have no medicine to treat those infected by smallpox, we have to be prepared to implement a plan like the one CDC has proposed. Theirs is the only option because our options are so limited. We need to expand our range of options. the countermeasure research gap We should not be lulled by the apparent successes with Cipro and the strains of anthrax we have seen in the recent attacks. We have not been able to prevent death in some of the patients with late-stage inhalation anthrax and Robert Stevens, Thomas Morris, Jr., Joseph Curseen, Kathy Nguyen, and Ottilie Lundgren died. This legislation is named in honor of them. What we needed for them, and did not have, is a drug or vaccine that would treat late stage inhalation anthrax. As I have said, we need an effective treatment for those who become infected with smallpox. We have a vaccine that effectively prevents smallpox infection, and administering this vaccine within four days of first exposure has been shown to offer some protections against acquiring infection and significant protection against a fatal outcome. The problem is that administering the vaccine in this time frame to all those who might have been exposed may be exceedingly difficult. And once infection has occurred, we have no effective treatment options. In the last century 500 million people have died of smallpox--more than have from any other infectious disease--as compared to 320 million deaths in all the wars of the twentieth century. Smallpox was one of the diseases that nearly wiped out the entire Native American population in this hemisphere. The last naturally acquired case of smallpox occurred in Somalia in 1977 and the last case from laboratory exposure was in 1978. Smallpox is a nasty pathogen, carried in microscopic airborne droplets inhaled by its victims. The first signs are headache, fever, nausea and backache, sometimes convulsions and delirium. Soon, the skin turns scarlet. When the fever lets up, the telltale rash appears--flat red spots that turn into pimples, then big yellow pustules, then scabs. Smallpox also affects the throat and eyes, and inflames the heart, lungs, liver, intestines and other internal organs. Death often came from internal bleeding, or from the organs simply being overwhelmed by the virus. Survivors were left covered with pockmarks--if they were lucky. The unlucky ones were left blind, their eyes permanently clouded over. Nearly one in four victims died. The infection rate is estimated to be 25-40 percent for those who are unvaccinated and a single case can cause 20 or more additional infections. During the 16th Century, 3.5 million Aztecs--more than half the population--died of smallpox during a two-year span after the Spanish army brought the disease to Mexico. Two centuries later, the virus ravaged George Washington's troops at Valley Forge. And it cut a deadly path through the Crow, Dakota, Sioux, Blackfoot, Apache, Comanche and other American Indian tribes, helping to clear the way for white settlers to lay claim to the western plains. The epidemics began to subside with one of medicine's most famous discoveries: the finding by British physician Edward Jenner in 1796 that English milkmaids who were exposed to cowpox, a mild second cousin to smallpox that afflicts cattle, seemed to be protected against the more deadly disease. Jenner's work led to the development of the first vaccine in Western medicine. While later vaccines used either a killed or inactivated form of the virus they were intended to combat, the smallpox vaccine worked in a different way. It relied on a separate, albeit related virus: first cowpox and the vacinnia, a virus of mysterious origins that is believed to be a cowpox derivative. The last American was vaccinated back in the 1970s and half of the US population has never been vaccinated. It is not known how long these vaccines provide protection, but it is estimated that the term is 3-5 years. In an elaborate smallpox biowarfare scenario enacted in February 1999 by the Johns Hopkins Center for Civilians Biodefense Studies, it was projected that within two months 15,000 people had died, epidemics were out of control in fourteen countries, all supplies of smallpox vaccine were depleted, the global economy was on the verge of collapse, and military control and quarantines were in place. Within twelve months it was projected that eighty million people worldwide had died. A single case of smallpox today would become a global public health threat and it has been estimated that a single smallpox bioterror attack on a single American city would necessitate the vaccination of 30-40 million people. The U.S. government is now in the process of purchasing substantial stocks of the smallpox vaccine. We then face a very difficult decision on deploying the vaccine. We know that some individuals will have an adverse reaction to this vaccine. No one in the United States has been vaccinated against smallpox in twenty-five years. Those that were vaccinated back then may not be protected against the disease today. If we had an effective treatment for those who might become infected by smallpox, we would face much less pressure regarding deploying the vaccine. If we face a smallpox epidemic from a bioterrorism attack, we will have no Cipro to reassure the public and we will be facing a highly contagious disease and epidemic. To be blunt, it will make the current anthrax attack look benign by comparison. Smallpox is not the only threat. We have seen other epidemics in this century. The 1918 influenza epidemic provides a sobering admonition about the need for research to develop medicines. In two years, a fifth of the world's population was infected. In the United States the 1918 epidemic killed more than 650,000 people in a short period of time and left 20 million seriously ill, one fourth of the entire population. The average lifespan in the U.S. was depressed by ten years. In just one year, the epidemic killed 21 million human beings worldwide--well over twice the number of combat deaths in the whole of World War I. The flu was exceptionally virulent to begin with and it then underwent several sudden and dramatic mutations in its structure. Such mutations can turn flu into a killer because its victims' immune systems have no antibodies to fight off the altered virus. Fatal pneumonia can rapidly develop. Another deadly toxin, ricin toxin, was of interest to the al-Qaeda terrorist network. At an al-Qaeda safehouse in Saraq Panza, Kabul reporters found instructions for making ricin. The instructions make chilling reading. ``A certain amount, equal to a strong dose, will be able to kill an adult, and a dose equal to seven seeds will kill a child,'' one page reads. Another page says: ``Gloves and face mask are essential for the preparation of ricin. Period of death varies from 3-5 days minimum, 4-14 days maximum.'' The instructions listed the symptoms of ricin as vomiting, stomach cramps, extreme thirst, bloody diarrhoea, throat irritation, respiratory collapse and death. No specific treatment or vaccine for ricin toxin exists. Ricin is produced easily and inexpensively, highly toxic, and stable in aerosolized form. A large amount of ricin is necessary to infect whole populations--the amount of ricin necessary to cover a 100-km\2\ area and cause 50 percent lethality, assuming aerosol toxicity of 3 mcg/kg and optimum dispersal conditions, is approximately 4 metric tons, whereas only 1 kg of Bacillus anthracis is required. But it can be used to terrorize a large population with great effect because it is so lethal. Use of ricin as a terror weapon is not theoretical. In 1991 in Minnesota, 4 members of the Patriots Council, an extremist group that held antigovernmental and antitax ideals and advocated the overthrow of the U.S. government, were arrested for plotting to kill a U.S. marshal with ricin. The ricin was produced in a home laboratory. They planned to mix the ricin with the solvent dimethly sulfoxide (DMSO) and then smear it on the door handles of the marshal's vehicle. The plan was discovered, and the 4 men were convicted. In 1995, a man entered Canada from Alaska on his way to North Carolina. Canadian custom officials stopped the man and found him in possession of several guns, $98,000, and a container of white powder, which was identified as ricin. In 1997, a man shot his stepson in the face. Investigators discovered a makeshift laboratory in his basement and found agents such as ricin and nicotine sulfate. And, ricin was used by the Bulgarian secret police when they killed Georgi Markov by stabbing him with a poison umbrella as he crossed Waterloo Bridge in 1978. Going beyond smallpox, influenza, and ricin, we do not have an effective vaccine or treatment for dozens of other deadly and disabling agents and toxin. Here is a partial list of some of the other biological agents and chemical toxins for which we have no effective treatments: clostridium botulinum toxin (botulism), francisella tularensis (tularaemia), Ebola hemorrhagic fever, Marbug hemorrhagic fever, Lassa fever, Julin (Argentine hemorrhagic fever), Coxiella burnetti (Q fever), brucella species (brucellosis), burkholderia mallei (glanders), Venezuelan encephalomyelitis, eastern and western equine encephalomyelitis, epsilon toxin of clostridium perfringens, staphylococcus entretoxin B, salmonella species, shigella dysenteriae, escherichia coli O157:H7, vibrio cholerae, cryptosporidium parvum, nipah virus, hantaviruses, tickborne hemorrhagic fever viruses, tickborne encephalitis virus, yellow fever, nerve agents (tabun, sarin, soman, GF, and VX), blood agents (hydrogen cyanide and cyanogens chloride), blister agents (lewisite, nitrogenadn sulfur mustards, and phosgene oxime), heavy metals (arsenic, lead, and mercury), and volatile toxins (benzene, chloroform, trihalomethanes), pulmonary agents (Phosgene, chlorine, vinly chloride), and incapacitating agents (BZ). The naturally occurring forms of these agents and toxins are enough to cause concern, but we also know that during the 1980s and 1990s the Soviet Union conducted bioweapons research at forty-seven laboratories and testing sites, employed nearly fifty thousand scientists in the work, and that they developed genetically modified versions of some of these agents and toxins. The goal was to develop an agent or toxin that was particularly virulent or not vulnerable to available antibiotic. The United States has publicly stated that five countries are developing biological weapons in violation of the Biological Weapons convention, North Korea, Iraq, Iran, Syria, and Libya, and stated that additional countries not yet named (possibly including Russia, China, Israel, Sudan and Egypt) are also doing so as well. What is so insidious about biological weapons is that in many cases the symptoms resulting from a biological weapons attack would likely take time to develop, so an act of bioterrorism may go undetected for days or weeks. Affected individuals would seek medical attention not from special emergency response teams but in a variety of civilian settings at scattered locations. This means we will need medicines that can treat a late stage of the disease, long after the infection has taken hold. We must recognize that the distinctive characteristic of biological weapons is that they are living micro-organisms and are thus the only weapons that can continue to proliferate without further assistance one released in a suitable environment. The lethality of these agents and toxins, and the panic they can cause, is quite frightening. The capacity for terror is nearly beyond comprehension. We do not believe it is necessary to describe the facts here. Our point is simple: we need more than military intelligence, surveillance, and public health capacity. We also need effective medicines. We also need more powerful research tools that will enable us to quickly develop treatments for agents and toxins not on this or any other list. We need to do whatever it takes to be able to reassure the American people that hospitals and doctors have powerful medicines to treat them if they are exposed to biological agents or toxins, that we can contain an outbreak of an infectious agent, and that there is little to fear. To achieve this objective, we need to rely on the entrepreneurship of the biotechnology industry. direct government funding of research There is already some direct funding of research by the Defense Advanced Research Projects Agency (DARPA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC). This research should go forward. DARPA, for instance, has been described as the Pentagon's ``venture capital fund,'' its mission to provide seed money for novel research projects that offer the potential for revolutionary findings. Last year, DARPA's Unconventional pathogen Countermeasures program awarded contracts totalling $50 million to universities, foundations, pharmaceutical and biotechnology companies seeking new ways to fight biological agents and toxins. The Unconventional Pathogen Countermeasures program now funds 43 separate research efforts on anti-bacterials, anti-toxins, anti-virals, decontamination, external protection from pathogens, immunization and multi-purpose vaccines and treatments. A common thread among many of these undertakings is the goal of developing drugs that provide broad-spectrum protection against several different pathogents. This year, with a budget of $63 million, the program has received over 100 research proposals in the last two months alone. Some of this DARPA research is directed at developing revolutionary, broad-spectrum, medical countermeasures against significantly pathogenic products. This goal is to develop countermeasures that are versatile enough to eliminate biological threats, whether from natural sources or modified through bioengineering or other manipulation. The countermeasures would need the potential to provide protection both within the body and at the most common portals of entry (e.g., inhalation, ingestion, transcutaneous). The strategies might include defeating the pathogen's ability to enter the body, traverse the bloodstream or lymphatics, and enter target tissues; identifying novel pathogen vulnerabilities based on fundamental, critical molecular mechanisms of survival or pathogenesis (e.g., Type III secretion, cellular energetics, virulence modulation); constructing unique, robust vehicles for the delivery of countermeasures into or within the body; and modulating the advantageous and/or deleterious aspects of the immune response to significantly pathogenic microorganisms and/or the pathogenic products in the body. While DAPRA's work is specifically aimed at protecting our military personnell, the National Institutes of Health also spent $49.7 million in the last fiscal year to find new therapies for those who contract smallpox and on systems for detecting the disease. In recent years, NIH's research programs have sought to create more rapid and accurate diagnostics, develop vaccines for those at risk of exposure to biological agents, and improve treatment for those infected. Moreover, in the last fiscal year, the Centers for Disease Control has allocated $18 million to continue research on an anthrax vaccine and $22.3 million on smallpox research. Some companies are willing to enter into a research relationships funded by DARPA and other agencies to develop countermeasures. Relationships between the government and private industry can be very productive, but they can also involve complex issues reflecting the different cultures of government and industry. Some companies-- including some of the most enterpreneurial--might prefer to take their own initiative to conduct this research. Relationships with government entities involve risks, issues, and bureaucracy that are not present in relationships among biotechnology companies and between them and non- governmental partners. The Defense Departments Joint Vaccine Acquisition Program (JVAP) illustrates the problems with a government led and managed program. A report in December 2000 by a panel of independent experts found that the current program ``is insufficient and will fail'' and recommended it adopt an approach more on the model of a private sector effort. It needs to adopt ``industry practices,'' ``capture industry interest,'' ``implement an organizational alignment that mirrors the vaccine industry's short chain of command and decision making,'' ``adopt an industry-based management philosophy,'' and ``develop a sound investment strategy.'' It bemoaned the ``extremely limited'' input from industry in the JVAP program. It is clear from this experience that we should not rely exclusively on government funding of countermeasures research. We should take advantage of the entrepreneurial fervor, and the independence, of our biotechnology industry entrepreneurs. It is not likely that the government will be willing or able to provide sufficient funding for the development of the countermeasures we need. Some of the most innovative approaches to vaccines and medicines might not be funded with the limited funds available to the government. We need to provide incentives that will encourage every biotech company to review its research priorities and technology portfolio for its relevance and potential for countermeasure research. Some of this research is early stage, basic research that is being developed and considered only for its value in treating an entirely different disease. We need to kindle the imagination of biotechnology companies and their tens of thousands of scientists regarding countermeasure research. industry research on countermeasures My proposal would supplement direct Federal government funding of research with incentives that make it possible for private companies to form the capital to conduct this research on their own initiative, utilizing their own capital, and at their own risk--all for good business reasons going to their bottom line. The U.S. biotechnology industry, approximately 1,300 companies, spent $13.8 billion on research last year. Only 350 of these companies have managed to go public. The industry employs 124,000 (Ernest & Young data) people. The top five companies spent an average of $89,000 per employee on research, making it the most research-intensive industry in the world. The industry has 350 products in human clinical trials targeting more than 200 diseases. Losses for the industry were $5.8 billion in 2001, $5.6 billion in 2000, $4.4 billion in 1999, $4.1 billion in 1998, $4.5 billion in 1997, $4.6 billion in 1996, and similar amounts before that. In 2000 fully 38 percent of the public biotech companies had less than 2 years of funding for their research. Only one quarter of the biotech companies in the United States are publicly traded and they tend to be the best funded. There is a broad range of research that could be undertaken under this legislation. Vaccines could be developed to prevent infection or treat an infection from a bioterror attack. Broad-spectrum antibiotics are needed. Also, promising research has been undertaken on antitoxins that could neutralize the toxins that are released, for example, by anthrax. With anthrax it is the toxins, not the bacteria itself, that cause death. An antitoxin could act like a decoy, attaching itself to sites on cells where active anthrax toxin binds and then combining with normal active forms of the toxin and inactivating them. An antitoxin could block the production of the toxin. We can rely on the innovations of the biotech industry, working in collaboration with academic medical centers, to explore a broad range of innovative approaches. This mobilizes the entire biotechnology industry as a vital component of our national defense against bioterror weapons. incentives needed to spur research The legislation takes a comprehensive approach to the challenges the biotechnology industry faces in forming capital to conduct research on countermeasures. It includes capital formation tax incentives, guaranteed purchase funds, patent protections, and liability protections. We believe we will have to include each of these types of incentives to ensure that we mobilize the biotechnology industry for this urgent national defense research. Some of the tax incentives in this legislation, and both of the two patent incentives I have proposed, may be controversial. In our view, we can debate tax or patent policy as long as you want, but let's not lose track of the issue here--development of countermeasures to treat people infected or exposed to lethal and disabling bioterror weapons. We know that incentives can spur research. In 1983 we enacted the Orphan Drug Act to provide incentives for companies to develop treatments for rare diseases with small potential markets deemed to be unprofitable by the industry. In the decade before this legislation was enacted, fewer than 10 drugs for orphan diseases were developed and these were mostly chance discoveries. Since the Act became law, 218 orphan drugs have been approved and 800 more are in the pipeline. The Act provides 7 years of market exclusivity and a tax credit covering some research costs. The effectiveness of the incentives we have enacted for orphan disease research show us how much we can accomplish when we set a national priority for certain types of research. The incentives we have proposed differ from those set by the Orphan Drug Act. We need to maintain the effectiveness of the Orphan Drug Act and not undermine it by adding many other disease research targets. In addition, the tax credits for research for orphan drug research have no value for most biotechnology companies because few of them have tax liability with respect to which to claim the credit. This explains why we have not proposed to utilize tax credits to spur countermeasures research. It is also clear that the market for countermeasures is even more speculative than the market for orphan drugs and we need to enact a broader and deeper package of incentives. decision making on targets and registration of research The government determines which research is covered by the legislation and which companies qualify for the incentives for this research. No company is entitled to utilize the incentives until the government certifies its eligibility. These decisions are vested in the Secretary, Department of Homeland Security. In S. 1764, the decisions were vested in the White House Office of Homeland Security, but it is now likely that a Department will be created. I have strongly endorsed that concept and led the effort to enact the legislation forming the new Department. The legislation confers on the Secretary, in consultation with the Secretary of Defense and Secretary of Health and Human Services, authority to set the list of agents and toxins with respect to which the legislation and incentives applies. The Secretary determines which agents and toxins present a threat and whether the countermeasures are ``more likely'' to be developed with the application of the incentives in the legislation. The Secretary may determine that an agent or toxin does not present a threat or that countermeasures are not more likely to be developed with the incentives. It may determine that the government itself should fund the research and development effort and not rely on private companies. The Department is required to consider the status of existing research, the availability of non-countermeasure markets for the research, and the most effective strategy for ensuring that the research goes forward. The legislation includes an illustrative, non-binding list of fifty- four agents and toxins that might be included on the Secretary's list. The decisions of the Secretary are final and are not subject to judicial review. The Department then must provide information to potential manufacturers of these countermeasures in sufficient detail to permit them to conduct the research and determine when they have developed the needed countermeasure. It may exempt from publication such information as it deems to be sensitive. The Department also must specify the government market that will be available when a countermeasure is successfully developed, including the minimum number of dosages that will be purchased, the minimum price per dose, and the timing and number of years projected for such purchases. Authority is provided for the Department to make advance, partial, progress, milestone, or other payments to the manufacturers. The Department is responsible for determining when a manufacturer has, in fact, successfully developed the needed countermeasure. It must provide information in sufficient detail so that manufacturers and the government may determine when the manufacturer has successfully developed the countermeasure the government needs. If and when the manufacturer has successfully developed the countermeasure, it becomes entitled to the procurement, patent, and liability incentives in the legislation. Once the list of agents and toxins is set, companies may register with the Department their intent to undertake research and development of a countermeasure to prevent or treat the agent or toxin. This registration is required only for companies that seek to be eligible for the tax, purchase, patent, and liability provisions of the legislation. The registration requirement gives the Department vital information about the research effort and the personnel involved with the research, authorizes inspections and other review of the research effort, and the filing of reports by the company. The Secretary then may certify that the company is eligible for the tax, purchase, patent, and liability incentives in the legislation. It bases this certification on the qualifications of the company to conduct the countermeasure research. Eligibility for the purchase fund, patent and liability incentives is contingent on successful development of a countermeasure according to the standards set in the legislation, as determined by the Secretary. The legislation contemplates that a company might well register and seek certification with respect to more than one research project and become eligible for the tax, purchase, patent, and liability incentives for each. There is no policy rationale for limiting a company to one registration and one certification. This process is similar to the current registration process for research on orphan (rare) diseases. In that case, companies that are certified by the FDA become eligible for both tax and market exclusivity incentives. This process gives the government complete control on the number of registrations and certifications. This gives the government control over the cost and impact of the legislation on private sector research. diagnostics and research tools The registration and certification process applies to research to develop diagnostics and research tools, not just drugs and vaccines. Diagnostics are vital because healthcare professionals need to know which agent or toxin has been used in an attack. This enables them to determine which treatment strategy is likely to be most effective. We need quickly to determine which individuals have been exposed or infected, and to separate them from the ``worried well.'' it is likely in an attack that large numbers of individuals who have not been exposed or infected will flood into healthcare facilities seeking treatment. We need to be able to focus on those individuals who are at risk and reassure those who are not at risk. In terms of research tools, it is possible that we will face biological agents and chemical agents we have never seen before. As I've mentioned, the Soviet Union bioterror research focused in part on use of genetic modification technology to develop agents and toxins that currently-available antibiotics can not treat. Australian researchers accidentally created a modified mousepox virus, which does not affect humans, but it was 100 percent lethal to the mice. Their research focused on trying to make a mouse contraceptive vaccine for pest control. The surprise was that it totally suppressed the ``cell- medicated response''--the arm of the immune system that combats viral infection. To make matters worse, the engineered virus also appears unnaturally resistant to attempts to vaccinate the mice. A vaccine that would normally protect mouse strains that are susceptible to the virus only worked in half the mice exposed to the killer version. If bioterrorists created a human version of the virus, vaccination programs would be of limited use. This highlights the drawback of working on vaccines against bioweapons rather than treatments. With the advances in gene sequencing--genomics--we will know the exact genetic structure of a biological agent. This information in the wrong hands could easily be manipulated to design and possibly grow a lethal new bacterial and viral strains not found in nature. A scientist might be able to mix and match traits from different micoorganism-- called recombinant technology--to take a gene that makes a deadly toxin from one strain of bacteria and introduce it into other bacterial strains. Dangerous pathogens or infectious agents could be made more deadly, and relatively benign agents could be designed as major public health problems. Bacteria that cause diseases such as anthrax could be altered in such a way that would make current vaccines or antibiotics against them ineffective. It is even possible that a scientist could develop an organism that develops resistance to antibiotics at an accelerated rate. This means we need to develop technology--research tools--that will enable us to quickly develop a tailor-made, specific countermeasure to a previously unknown organism or agent. These research tools will enable us to develop a tailor-made vaccine or drug to deploy as a countermeasure against a new threat. The legislation authorizes companies to register and receive a certification making them eligible for the incentives in the bill for this vital research. Tax Incentives for Capital Formation The legislation includes four tax incentives to enable biotechnology and pharmaceutical companies to form capital to fund research and development of countermeasures. Companies must irrevocably elect only one of the incentives with regard to the countermeasure research. Four different tax incentives are available so that companies have flexibility in forming capital to fund the research. Each of the options comes with advantages and limitations that may make it appropriate or inappropriate for a given company or research project. We do not now know fully how investors and capital markets will respond to the different options, but we assume that companies will consult with the investor community about which option will work best for a given research project. Capital markets are diverse and investors have different needs and expectations. Over time these markets and investor expectations evolve. If companies register for more than one research project, they may well utilize different tax incentives for the different projects. Companies are permitted to undertake a series of discrete and separate research projects and make this election with respect to each project. They may only utilize one of the options with respect to each of these research projects. The first option is for the company to establish an R&D Limited Partnership to conduct the research. The partnership passes through all business deductions and credits to the partners. For example, under this arrangement, the research and development tax credits and depreciation deductions for the company may be passed by the corporation through to its partners to be used to offset their individual tax liability. These deductions and credits are then lost to the corporation. This alternative is available only to companies with less than $750,000,000 in paid-in capital. The second option is for the company to issue a special class of stock for the entity to conduct the research. The investors would be entitled to a zero capital gains tax rate on any gains realized on the stock held for at least three years. This is a modification of the current Section 1202 where only 50 percent of the gains are not taxed. This provision is adapted from legislation I have introduced, S. 1134, and introduced in the House by Representatives Dunn and Matsui (H.R. 2383). A similar bill has been introduced by Senator Collins, S. 455. This option also is available to small companies. The third and fourth options grant special tax credits to the company for the research. The first credit is for research conducted by the company and the other for research conducted at a teaching hospital or similar institution. Tax credits are available to any company, but they are only useful to a company with tax liability against which to claim the credit. Very few biotechnology companies receive revenue from product sales and therefore have no tax liability. Companies with revenue may be able to fund the research from retained earnings rather than secure funding from investors. A company that elects to utilize one of these incentives is not eligible to receive benefits of the Orphan Drug Tax Credit. Companies that can utilize tax credits--companies with taxable income and tax liability--might find the Orphan Credit more valuable. The legislation includes an amendment to the Orphan Credit to correct a defect in the current credit. The amendment has been introduced in the Senate as S. 1341 by Senators Hatch, Kennedy and Jeffords. The amendment simply states that the Credit is available starting the day an application for orphan drug status is filed, not the date the FDA finally acts on it. The amendment was one of many initiatives championed by Lisa J. Raines, who died on September 11 in the plane that hit the Pentagon, and the amendment is named in her honor. As we go forward in the legislative process, I hope we will have an opportunity to speak in more detail about the service of Ms. Raines on behalf of medical research, particularly on rare diseases. The guaranteed purchase fund, and the patent protections, and liability provisions described below provide an additional incentive for investors and companies to fund the research. Government Countermeasure Purchase Fund The market for countermeasures is speculative and small. This means that if a company successfully develops a countermeasure, it may not receive sufficient revenue on sales to justify the risk and expense of the research. This is why the legislation establishes a countermeasures purchase fund that will define the market for the products with some specificity before the research begins. The Secretary will set standards for which countermeasures it will purchase and define the financial terms of the purchase commitment. This will enable companies to evaluate the market potential of its research before it launches into the project. The specifications will need to be set with sufficient specificity so that the company--and its investors--can evaluate the market and with enough flexibility so that it does not inhibit the innovativeness of the researchers. This approach is akin to setting a performance standard for a new military aircraft. The legislation provides that the Secretary will determine whether the government will purchase more than one product per class. It might make sense--as an incentive--for the government to commit to purchasing more than one product so that many more than one company conducts the research. A winner-take-all system may well intimidate some companies and we may end up without a countermeasure to be purchased. It is also possible that we will find that we need more than one countermeasure because different products are useful for different patients. We may also find that the first product developed is not the most effective. The purchase commitment for countermeasures is available to any company irrespective of its paid-in capital. intellectual property protections Intellectual property protection of research is essential to biotechnology and pharmaceutical companies for one simple reason: they need to know that if they successfully develop a medical product another company cannot expropriate it. It's a simple matter of incentives. The patent system has its basis in the U.S. Constitution where the federal government is given the mandate to ``promote the progress of Science and the Useful Arts by securing for a limited time to Authors and Inventors the exclusive right to their respective Writings and Discoveries.'' In exchange for full disclosure of the terms of their inventions, inventors are granted the right to exclude others from making, using, or selling their inventions for a limited period of time. this quid pro quo provides investors with the incentive to invent. In the absence of the patent law, discoverable inventions would be freely available to anyone who wanted to use them and inventors would not be able to capture the value of their inventions or secure a return on their investments. The patent system strikes a balance. Companies receive limited protection of their inventions if they are willing to publish the terms of their invention for all to see. At the end of the term of the patent, anyone can practice the invention without any threat of an infringement action. During the term of the patent, competitors can learn from the published description of the invention and may well find a new and distinct patentable invention. The legislation provides two types of intellectual property protection. The first simply provides that the term of the patent on the countermeasure will be the term of the patent granted by the Patent and Trademark Office without any erosion due to delays in approval of the product by the Food and Drug Administration. The second provides that a company that successfully develops a countermeasure will receive a bonus of two years on the term of any patent held by that company. Companies must elect one of these two protections, but only small biotechnology companies may elect the second protection. Large, profitable pharmaceutical companies may elect only the first of the two options. The first protection against erosion of the term of the patent is an issue that is partially addressed in current law, the Hatch-Waxman Patent Term Restoration Act. That act provides partial protection against erosion of the term (length) of a patent when there are delays at the FDA in approving a product. The erosion occurs when the PTO issues a patent before the product is approved by the FDA. In these cases, the term of the patent is running but the company cannot market the product. The Hatch-Waxman Act provides some protections against erosion of the term of the patent, but the protections are incomplete. As a result, many companies end up with a patent with a reduced term, sometimes substantially reduced. The issue of patent term erosion has become more serious due to changes at the PTO in the patent system. The term of a patent used to be fixed at 17 years from the date the patent was granted by the PTO. It made no difference how long it took for the PTO to process the patent application and sometimes the processing took years, even decades. Under this system, there were cases where the patent would issue before final action at the FDA, but there were other cases where the FDA acted to approve a product before the patent was issued. Erosion was an issue, but it did not occur in many cases. Since 1995 the term of a patent has been set at 20 years from the date of application for the patent. This means that the processing time by the PTO of the application all came while the term of the patent is running. This gives companies a profound incentive to rush the patent through the PTO. (Under the old system, companies had the opposite incentive.) With patents being issued earlier by the PTO, the issue of erosion of patent term due to delays at the FDA is becoming more serious and more common. The provision in the legislation simply states that in the case of bioterrorism countermeasures, no erosion in the term of the patent will occur. The term of the patent at the date of FDA approval will be the same as the term of the patent when it was issued by the PTO. There is no extension of the patent, simply protections against erosion. Under the new 20 year term, patents might be more or less than 17 years depending on the processing time at the PTO, and all this legislation says is that whatever term is set by the PTO will govern irrespective of the delays at the FDA. This option is available to any company that successfully develops a countermeasure eligible to be purchased by the fund. The second option, the bonus patent term, is only available to small companies with less than $750,000,000 in paid-in capital. It provides that a company that successfully develops a countermeasure is entitled to a two-years extension of any patent in its portfolio. This does not apply to any patent of another company bought or transferred in to the countermeasure research company. I am well aware that this bonus patent term provision will be controversial with some. A company would tend to utilize this option if it owned the patent on a product that still had, or might have, market value at the end of the term of the patent. Because this option is only available to small biotechnology companies, most of whom have no product on the market, in most cases they would be speculating about the value of a product at the end of its patent. The company might apply this provision to a patent that otherwise would be eroded due to FDA delays or it might apply it to a patent that was not eroded. The result might be a patent term that is no longer than the patent term issued by the PTO. It all depends on which companies elect this option and which patent they select. In some cases, the effect of this provision might be to delay the entry onto the market of lower priced generics. This would tend to shift some of the cost of the incentive to develop a countermeasure to insurance companies and patients with an unrelated disease. My rationale for including the patent bonus in the legislation is simple: I want this legislation to say emphatically that we mean business, we are serious, and we want biotechnology companies to reconfigure their research portfolios to focus in part on development of countermeasures. The other provisions in the legislation are powerful, but they may not be sufficient. limitation on liability This proposal protects companies willing to take the risks of producing anti-terrorism products for the American public from potential losses incurred from lawsuits alleging adverse reactions to these products. It also preserves the right for plaintiffs to seek recourse for alleged adverse reactions in Federal District Court, with procedural and monetary limitations. Under the plan, the Secretary of HHS is required to indemnify and defend entities engaged in qualified countermeasure research through execution of ``indemnification and defense agreements.'' This protection is only available for countermeasures purchased under the legislation or to use of such countermeasures as recommended by the Surgeon General in the event of a public health emergency. An exclusive means of resolving civil cases that fall within the scope of the indemnification and defense agreements is provided with litigation rights for injured parties. Non-economic damages are limited to $250,000 per plaintiff and no punitive or exemplary damages may be awarded. Some have tried to apply the existing Vaccine Injury Compensation Program (VICP) to this national effort. That is inappropriate because that program will be extremely difficult to use, both administratively and scientifically. For example, it would take several years to develop the appropriate ``table'' that identifies a compensable injury. Companies will be liable during this process. Note that when VICP was created, there had been studies of what adverse reactions to mandated childhood vaccines had occurred and the table was based largely on this experience. Even so, it has taken years of effort, ultimately resulting in wholesale revisions to the table by regulation, to get the current table in place. For anti-bioterrorism products currently being developed, it will simply be impossible to construct a meaningful Vaccine Injury Table--there will be no experience with the product. miscellanelous provisions The legislation contains a series of provisions designed to enhance countermeasure research. The legislation provides for accelerated approval by the FDA of countermeasures developed under the legislation. In most cases, the products would clearly qualify for accelerated approval, but the legislation ensures that they will be reviewed under this process. It provides a statutory basis for the FDA approving countermeasures where human clinical trials are not appropriate or ethical. Rules regarding such products have been promulgated by the FDA. It grants a limited antitrust exemption for certain cooperative research and development of countermeasures. It provides incentives for the construction of biologics manufacturing facilities and research to increase the efficiency of current biologics manufacturing facilities. It enhances the synergy between our for-profit and not for profit biomedical research entities. The Bayh-Dole Act and Stevenson-Wydler Act form the legal framework for mutually beneficially partnerships between academia and industry. My legislation strengthens this synergy and these relationships with two provisions, one to upgrade the basic research infrastructure available to conduct research on countermeasures and the other to increase cooperation between the National Institutes of Health and private companies. Research on countermeasures necessitates the use of special facilities where biological agents can be handled safely without exposing researchers and the public to danger. Very few academic institutions or private companies can justify or capitalize the construction of these special facilities. The Federal government can facilitate research and development of countermeasures by financing the construction of these facilities for use on a fee-for-service basis. The legislation authorizes appropriations for grants to non-profit and for-profit institutions to construct, maintain, and manage up to ten Biosafety Level 3-4 facilities, or their equivalent, in different regions of the country for use in research to develop countermeasures. BSL 3-4 facilities are ones used for research on indigenous, exotic or dangerous agents with potential for aerosol transmission of disease that may have serious or lethal consequences or where the agents pose high risk of life-threatening disease, aerosol-transmitted lab infections, or related agents with unknown risk of transmission. The Director of the Office and NIH shall issue regulations regarding the qualifications of the researchers who may utilize the facilities. Companies that have registered with and been certified by the Director--to develop countermeasures under Section 5(d) of the legislation--shall be given priority in the use of the facilities. The legislation also reauthorizes a very successful NIH-industry partnership program launched in FY 2000 in Public Law 106-113. The funding is for partnership challenge grants to promote joint ventures between NIH and its grantees and for-profit biotechnology, pharmaceutical and medical device industries with regard to the development of countermeasures (as defined in Section 3 of the bill) and research tools (as defined in Section 4(d)(3) of the bill). Such grants shall be awarded on a one-for-one matching basis. So far the matching grants have focused on development of medicines to treat malaria, tuberculosis, emerging and resistant infections, and therapeutics for emerging threats. My proposal should be matched by reauthorization of the challenge grant program for these deadly diseases. The legislation also sets incentives for the development of adjuvents to enhance the potency, and efficacy of antigens in responding to a biological agent. It requires the new Department to issue annual reports on the effectiveness of this legislation and these incentives, and directs it to host an international conference each year on countermeasure research. calibration of incentives The legislation is carefully calibrated to provide incentives only where they are needed. This accounts for the choices in the legislation about which provisions are available to small biotechnology companies and large pharmaceutical companies. The legislation makes choices. It sets the priorities. It provides a dose of incentives and seeks a response in the private sector. We are attempting here to do something that has not been done before. This is uncharted territory. And it also an urgent mission. There may be cases where a countermeasure developed to treat a biological toxin or chemical agent will have applications beyond this use. A broad-spectrum antibiotic capable of treating many different biological agents may well have the capacity to treat naturally occurring diseases. This same issue arises with the Orphan Drug Act, which provides both tax and FDA approval incentives for companies that develop medicines to treat rare diseases. In some cases these treatments can also be used for larger disease populations. There are few who object to this situation. We have come to the judgment that urgency of this research is worth the possible additional benefits that might accrue to a company. In the context of research to develop countermeasures, I do not consider it a problem that a company might find a broader commercial market for a countermeasure. Indeed, it may well be the combination of the incentives in this legislation and these broader markets that drives the successful development of a countermeasure. If our intense focus on developing countermeasures, and research tools, provides benefits for mankind going well beyond terror weapons, we should rejoice. If this research helps us to develop an effective vaccine or treatment for AIDS, we should give the company the Nobel Prize for Medicine. If we do not develop a vaccine or treatment for AIDS, we may see 100 million people die of AIDS. We also have 400 million people infected with malaria and more than a million annual deaths. Millions of children die of diarrhea, cholera and other deadly and disabling diseases. Countermeasures research may deepen our understanding of the immune system and speed and development of treatments for cancer and autoimmune diseases. That is not the central purpose of this legislation, but it is also an additional rationale for it. conclusion This issue raised by my legislation is very simple: do we want the Federal government to fund and supervise much of the research to develop countermeasures or should we also provide incentives that make it possible for the private sector, at its own expense, and at its own risk, to undertake this research for good business reasons. This Frist- Kennedy law focuses effectively on direct Federal funding and coordination issues, but it does not include the sufficient incentives for the private sector to undertake this research on its own initiative. That law and my legislation are perfectly complimentary. We need to enact both to ensure that we are prepared for bioterror attacks. I ask unanimous consent that an outline of the legislation appear at this point in the Record. Biological, Chemical and Radiological Weapons Countermeasures Research Act of 2002 The legislation, a refined version of S. 1764 introduced on December 4, 2001, proposes incentives that will enable biotechnology and pharmaceutical companies to take the initiative--for good business reasons--to conduct research to develop countermeasures, including diagnostics, drugs, and vaccines, to treat those who might be exposed to or infected by biological, chemical or radiological agents and materials in a terror attack. The premise of this legislation is that direct government funding of this research is likely to be much more expensive to the government and less likely to produce the countermeasures we need to defend America. Shifting some of the risk and expense of this research to entrepreneurial private sector firms is likely to be less expensive to the government and much more likely to produce the countermeasures we need to protect ourselves in the event of an attack. For biotechnology companies, incentives for capital formation are needed because most such companies have no approved products or revenue from product sales to fund research. They rely on investors and equity capital markets to fund the research. These companies must focus on research that will lead to product sales and revenue and end their dependence on investor capital. When they are able to form the capital to fund research, biotech companies tend to be innovative and nimble and focused on the intractable diseases for which no effective medical treatments are available. Special research credits for pharmaceutical companies are also needed. For both biotech and pharmaceutical companies, there is no established or predictable market for these countermeasures. Investors and companies are justifiable reluctant to fund this research, which will present technical challenges similar in complexity to development of effective treatments for AIDS. Investors and companies need assurances that research on countermeasures has the potential to provide a rate of return commensurate with the risk, complexity and cost of the research, a rate of return comparable to that which may arise from a treatment for cancer, MS, Cystic Fibrosis and other major diseases or from other investments. The legislation provides tax incentives to enable companies to form capital to conduct the research and tax credits usable by larger companies with tax liability with respect to which to claim the credits. It provides a guaranteed and pre- determined market for the countermeasures and special intellectual property protections to serve as a substitute for a market. Finally, it establishes liability protections for the countermeasures that are developed. Specifics of the legislation are as follows: (1) Setting Research Priorities (Section 101): The Department of Homeland Security sets the countermeasure research priorities in advance. It focuses the priorities on threats for which countermeasures are needed, and with regard to which the incentives make it ``more likely'' that the private sector will conduct the research to develop countermeasures. It is required to consider the status of existing research, the availability of non-countermeasure markets for the research, and the most effective strategy for ensuring that the research goes forward. The Department then provides information to potential manufacturers of these countermeasures in sufficient detail to permit them to conduct the research and determine when they have developed the needed countermeasure. The Department is responsible for determining when a manufacturer has, in fact, successfully developed the needed countermeasure. (2) Registration of Companies (Section 102): Biotechnology and pharmaceutical companies register with the Department to become eligible for the incentives in the legislation. They are obligated to provide reports to the Department as requested and be open to inspections. The Department certifies with companies are eligible for the incentives. Once a company is certified as eligible for the incentives, it becomes eligible for the tax incentives for capital formation, and if it successfully develops a countermeasure that meets the specifications of the Department, it becomes eligible for the procurement, patent, and liability provisions. (3) Diagnostics (Section 103): The incentives apply to development of diagnostics, as well as drugs, vaccines and other needed countermeasures. (4) Research tools (Section 104): A company is also eligible for certification for the tax and patent provisions if it seeks to develop a research tool that will make it possible to quickly develop a countermeasure to a previously unknown agent or toxin, or an agent or toxin not targeted by the Department for research. (5) Capital Formation for Countermeasure Research (Section 201): The legislation provides that a company seeking to fund research is eligible to elect from among four tax incentives. The companies are eligible to: (a) Establish an R&D Limited Partnership to conduct the research. The partnership passes through all business deductions and credits to the partners. Section 201 (b)(1). (b) Issue a special class of stock for the entity to conduct the research. The investors would be entitled to a zero capital gains tax rate on any gains realized on the stock. Section 201(b)(2). (c) Receive a special tax credit to help fund the research. Section 201 (b)(3). (d) Receive a special tax credit for research conducted at a non-profit and academic research institution. Section 201 (b)(4). A company must elect only one of these incentives and, if it elects one of these incentives, it is then not eligible to receive benefits under the Orphan Drug Act. The legislation includes amendments (Section 218) to the Orphan Drug Act championed by Senators Hatch, Kennedy and Jeffords (S. 1341). the amendments make the Credit available from the date of the application for Orphan Drug status, not the date the application is approved as provided under current law. (6) Countermeasure Purchase Fund (Section 202): The legislation provides that a company that successfully develops a countermeasure--through FDA approval--is eligible to sell the product to the Federal government at a pre- established price and in a pre-determined amount. The company is given notice of the terms of the sale before it commences the research. (7) Intellectual Property Incentives (Section 203): The legislation provides that a company that successfully develops a countermeasure is eligible to elect one of two patent incentives. The two alternatives are as follows: (a) The company is eligible to receive a patent for its invention with a term as long as the term of the patent when it was issued by the Patent and Trademark Office, without any erosion due to delays in the FDA approval process. This alternative is available to any company that successfully develops a countermeasure irrespective of its paid-in capital. (b) The company is eligible to extend the term of any patent owned by the company for two years. The patent may not be one that is acquired by the company from a third party. This is included as a capital formation incentive for small biotechnology companies with less than $750 million in paid- in capital, or, at the discretion of the Department of Homeland Security, to any firm that successfully develops a countermeasure. In addition, a company that successfully develops a countermeasure is eligible for a 10 year period of market exclusivity on the countermeasure. (8) Liability Protections (Section 204): The legislation provides for protections against liability for the company that successfully develops a countermeasure. (9) Accelerated Approval of Countermeasure (Section 211): The countermeasures are considered for approval by the FDA on a ``fast track'' basis. (10) Special Approval Standards (Section 212): The countermeasures may be approved in the absence of human clinical trails if such trails are impractical or unethical. (11) Limited Antitrust Exemption (Section 213): Companies are granted a limited exemption from the antitrust laws as they seek to expedite research on countermeasures. (12) Biologics Manufacturing Capacity and Efficiency (Sections 214-215): Special incentives are incorporated to ensure that manufacturing capacity is available for countermeasures. (13) Strengthening of Biomedical Research Infrastructure: Authorizes appropriations for grants to construct specialized biosafety containment facilities where biological agents can be handled safely without exposing researchers and the public to danger (Section 216). Also reauthorizes a successful NIH- industry partnership challenge grants to promote joint ventures between NIH and its grantees and for-profit biotechnology, pharmaceutical and medical device industries with regard to the development of countermeasures and research tools (Section 217). (14) Adjuvents (Section 219): The legislation provides incentives for the development and use of adjuvents to enhance the potency of countermeasures. (15) Annual Report (Section 220): The Department is required to prepare for the Congress an annual report on the implementation of these incentives. (16) International Conference (Section 221): The Department is required to organize an annual international conference on countermeasure research.

Mr. LIEBERMAN

Mr. LIEBERMAN. Mr. President. I rise today with great sadness to pay tribute to the late State Representative John S. Martinez, Deputy Majority Leader of the Connecticut General Assembly, who lost his life on October 10 in a tragic automobile accident. Mr. Martinez served New Haven's 95th Assembly District where he served on the Finance, Revenue & Bonding Committee and the Judiciary Committee. He leaves behind a career of compassionate public service, particularly to the underprivileged. Mr. Martinez was born in 1953 in the City of New York to Puerto Rican parents. His family has resided in the City of New Haven for 39 years. From 1991 to 1997, Mr. Martinez developed and served as Project Director of the Hill Health Center/Grant Street Partnership, a Substance Abuse Intensive Day Treatment Program for women and men. Mr. Martinez worked for 15 years with the homeless and substance abusing population. He was very active on both local and state-wide level community service boards and commission, including the Community Action Agency in New Haven, LULAC Headstart, Community Partners In Action, Latino Youth, Inc., New Haven Parking Authority Commission and Children Center in Hamden. Mr. Martinez was also President of the National Hispanic Caucus of State Legislators, and a member of the Council of State Governments/ ERC, the National Criminal Justice Task Force/CSG, the Fighting Back Treatment Intervention Committee and the Connecticut Hispanic Addiction Commission, CHAC. My thoughts and prayers are with the Martinez family, and the people of Connecticut, who will all feel this great loss.

Mr. LIEBERMAN

Mr. LIEBERMAN. I thank my friend. This exchange has clarified for me the intentions of the amendment. If I may briefly state it, you are saying the President can only take--forgive me for using the word ``only,'' but I will clarify it--action against, can only use the Armed Forces of the U.S. to take action against the weapons of mass destruction in Iraq without a U.N. resolution if he determines the threat from those weapons is imminent.

Mr. LIEBERMAN. No. I think I will just finish because I am taking Senator Biden's time. I am reassured but still puzzled about why you then have the second part of your amendment, I say to Senator Levin. And it is this: If you believe you are not saying the ``only'' way the President can use America's military forces to disarm Iraq, then why do you require a return to the Congress for that authorization later? It seems to me your affirmation of self-defense is very broad, and in spelling out the pursuant clause, you are limiting it. If you are not, then your language is effectively a nullity.

Mr. LIEBERMAN. I want to assure the Senator from Maryland this is not a tactic. I am genuinely puzzled, for two reasons. You give the grant of authority, and then you say ``pursuant.'' It seems to me logical the grant of self-defense, and then you spell out that pursuant to only a U.N. resolution can the President use the Armed Forces. But then here is the second. Only----

Mr. LIEBERMAN. Well, let me relieve you of your pain.

Mr. LIEBERMAN. I thank the Senator from Delaware very much. I want to ask my friend from Michigan or my friend from Maryland to explain how you relate two parts of the Levin amendment. One, yes, does say you affirm the right of the U.S. to self-defense, but then, two sections lower, it seems to me, you cut a very big exception, and you say ``pursuant.'' And because you say ``pursuant,'' I assume it means only pursuant to a U.N. Security Council resolution can the President authorize the use of ``the Armed Forces of the United States to destroy, remove, or render harmless Iraq's weapons of mass destruction, nuclear weapons-usable material, ballistics missiles . . . and related facilities. . . .'' So it is one thing to affirm the general right of self-defense, but then the amendment takes it away with regard to what we all acknowledge is the most serious threat that Iraq constitutes to the U.S., which is weapons of mass destruction.

Mr. LIEBERMAN. Is there time remaining, I ask the Senator from Arizona--the Senator from Virginia?

Mr. LIEBERMAN. Will the Senator yield for a question?

Mr. LIEBERMAN. Mr. President, I rise to oppose the amendment offered by my friend, the Senator from Michigan. It seems to me, as I look at this amendment, that the difference we have--those of us who have sponsored the underlying resolution, and the Senator from Michigan and others sponsoring the amendment--is over tactics, not objectives. Perhaps we should acknowledge one to the other. We each have the objective, I believe, to compel Saddam Hussein to comply with the various U.N. Security Council resolutions, and in that sense, particularly, to disarm. I suggest to my friend from Michigan, noting how he continues to refer to his amendment as the multilateral approach, that those who sponsored the underlying resolution consider ours to be a multilateral international approach as well. We believe our willingness not only to accept and urge and encourage the President to go to the United Nations and hope the United Nations will authorize use of force if Saddam Hussein does not comply with their resolutions but our willingness after that fact to say if that does not happen, the President has the right to utilize America's Armed Forces for that purpose, is probably the better way to achieve an international action against Iraq under Saddam Hussein. To show our willingness, our seriousness to use military force to lead an international coalition ourselves is the better way to convince the United Nations to take action on its own and therefore to have an international act. There is a disagreement about tactics. The disagreement is whether we should do all this in one resolution, as we have, or, as the Senator from Michigan proposes in the amendment, to have two steps: First, go to the United Nations, only allow enforcement, particularly of the resolutions concerning Iraq's weapons of mass destruction, to be done by the United States with the permission of the United Nations. If that does not work, the President must come back for a separate resolution. Last night in a colloquy with the Senator from Michigan, I suggested that his resolution does in fact give the Security Council a veto over the President's determination, the President's capacity, to use the American military to enforce certainly those resolutions having to do with weapons of mass destruction and ballistic missiles and related facilities. It seems to me, notwithstanding the fact that the Senator's amendment affirms the President's inherent right to use military force in self- defense, section 4(a) also makes clear the President of the United States can only do that if he wants to take action to destroy or remove or render harmless Iraq's weapons of mass destruction, nuclear weapons, fissile material, ballistics, et cetera, pursuant to a resolution of the U.N. Security Council. That means any member of the Security Council--Russia, China, France, any temporary member--can veto action by the United States, by the Commander in Chief. I don't want that to happen. The question is, Why assume, if the United Nations does not take action, the United States will have to go it alone? Having gone to the United Nations, having made our case, the fact is if military action is necessary, the United States will never have to go alone. We will have allies in Europe, allies in the Middle East, who see our seriousness of purpose, who share in our desire to protect themselves and the world from Saddam Hussein, who will come to our side. We will have what we called in the case of Kosovo a coalition of the willing. The Kosovo case is instructive on several points raised in this debate. There was no United Nations resolution authorizing the United States to deploy forces in the case of Kosovo because everyone, including the Clinton administration, the President, determined we would possibly be subject to a Russian veto at the Security Council. The President was unwilling to accept that. There was no congressional resolution then organizing the deployment of our forces because there was controversy about that. There was clearly no imminent threat of a sudden direct attack against the United States, as in other amendments that have been before the Senate, because this was happening in the Balkans. But the President of the United States, President Clinton, clearly understood what was happening there was wrong. He wanted to take action not only to stop the genocide and prevent a wider war in Europe but in the most distant threat, to prevent a potential threat to the security of the United States, so he formed a coalition of willing nations. Here the threat from Iraq under Saddam Hussein is much more imminent to the United States. So to subject our capacity to defend ourselves against that threat to a veto by the United Nations Security Council is inappropriate and wrong. Again, I state a great phrase from the Bible: If the sound of the trumpet is uncertain, who will follow into battle? If we sound a certain trumpet with this resolution, which this amendment would make uncertain, then many other nations will follow us into battle. I oppose the amendment.

Mr. LIEBERMAN. I thank the Chair and I thank my friend from Virginia for yielding me the time.

Mr. LIEBERMAN. Mr. President, I thank the majority leader for his gracious yielding of time. I thank him for more than that. I thank him for his leadership in this matter of how the Senate should proceed with regard to Iraq, and I thank him specifically for the work that he and his staff did in negotiations with the White House and with Members of the House to get this resolution to where it is where I am confident it can and will enjoy broad bipartisan support. There will be time for debate later in the day about the relevance of this resolution, about the extent to which I am confident it is clearly within our constitutional authority under article I. I have comparisons to other declarations of war and authorizations of military action, that is, if anything, more specific than most. I am inspired by Senator Byrd's reference to Nathan Hale. Nathan Hale was not only a son of Connecticut, but a Yale man. For my entire freshman year, I walked by an inspiring statue of Nathan Hale. I read about him. I studied him. I cannot say I knew him personally, but I feel as if I knew Nathan Hale, who was remembered for saying: ``I regret I have only one life to give for my country.'' Nathan Hale was a patriot, and he was prepared to give his life for the security and freedom of his country. I am absolutely confident that if Nathan Hale were in the Senate of the United States today, he would not only be cosponsoring this resolution, he would be impatient to have the talking stop and the action begin. Is it time? Are we ready? Time is what it is about. It is 12 years since Iraq invaded Kuwait and threatened to invade Saudi Arabia and thereby showed that all that Saddam Hussein had been saying about wanting to make Baghdad the capital of the Arab world and dominate the Arab world was not just talk; he was prepared to act on it. It is 12 years since U.N. Resolution 678 authorizing the use of force against Iraq. It is 11 years since the congressional authorization for Desert Storm and the triumphant brilliant effort of our military in Desert Storm. It is 11 years since Saddam asked for a cease-fire and accepted the inspection regime as part of that cease-fire on which he has never followed through and complied. It is 11 years since the no-fly zones were first adopted and began to be enforced by American military personnel. It is 9 years since the U.N. found Saddam in ``material breach of his international obligations.'' It is 9 years since Iraq under Saddam Hussein attempted to assassinate former President Bush. It is 6 years since Saddam crushed Kurdish and Shi'a resistance to his regime. It is 4 years since Saddam ejected inspectors and President Clinton ordered Operation Desert Fox, an air campaign against Iraq in response to this act. It is 4 years since this Senate called for the indictment of Saddam as a war criminal. It is 4 years since the Senate found Iraq in breach of international obligations and authorized the President to take ``appropriate action in accordance with the Constitution and relevant laws of the United States to bring Iraq into compliance with its international obligation.'' It is 4 years since Congress passed and President Clinton signed the Iraq Liberation Act. It is more than 1 year since we were attacked by terrorists on September 11, 2001, showing us the risks of inaction against those who would arm and threaten us. It is 1 month since the President of the United States challenged the United Nations to act against this international lawbreaker. It is 8 days since we started the debate on this resolution in the Senate; excluding the Sabbath, 6 days. The Lord made Heaven and Earth in 6 days. It is time now for us to come to a conclusion. Is it time? Are we ready to act? I think the record shows we are ready to act. I thank the Chair, and I yield the floor.

Mr. LIEBERMAN. I ask for the yeas and nays.

Mr. LIEBERMAN. Mr. President, have the yeas and nays been ordered?

Mr. LIEBERMAN. Mr. President, I yield the remaining time on our side to my friend from Arizona.

Mr. LIEBERMAN. I thank the Chair. Mr. President, I thank my colleague from Arizona. The amendment of the Senator from West Virginia which is before us would terminate, 12 months after the date of enactment of the underlying joint resolution, the authorization given in that resolution. In other words, it would put a time limit of a year subject to extension, but, nonetheless, a time limit for a year on the authorization provided in the underlying resolution. I say to my colleagues respectfully, this amendment is unprecedented and unwise. It is unprecedented in the sense that in brief research overnight, I have not been able to find an occasion in which Congress has exercised authority with regard to military action under article I of the Constitution when Congress has attached a time limit to it. There was one occasion when time limits were discussed with regard to the deployment of American forces in Bosnia, the Balkans, during the nineties, but I think we saw there why congressional imposition of time limits on authorization of military action is unwise. Why is it unwise? It is unwise because it gives notice to our enemies that there is a limit to the authority we are giving the President as Commander in Chief of our military forces. It allows them to calculate their actions based on that limited duration. In Bosnia, when that deadline was articulated by the administration, it created expectations which were quite naturally frustrated and therein created a credibility gap. There is a deadline in the underlying resolution, and the deadline is what it ought to be and always has been for military actions in which the Armed Forces of the United States have been involved. The authorization ends when the mission is accomplished, and in this case the authorization would end when the two missions stated were accomplished: When the President as Commander in Chief concluded that America was adequately protected, our national security was adequately protected from threats from Iraq, and that the relevant United Nations resolutions were adequately being enforced. That is the deadline. If the mood of Congress should change, if the attitude of the public should change, Congress always reserves, as it has shown in the past, the power of the purse and the power to change its opinion. But this amendment at this time, as we try to gather our strength and unity of purpose to convince the international community to join with us, as they surely will, is to finally get Saddam Hussein to keep his promise to disarm at the end of the gulf war. We need no limitations on authority. We need to speak with a clear voice. As it says in the Bible, if the sound of the trumpet be uncertain, who shall follow? And if we put a 12-month time limit on the authority of the underlying resolution, I fear that fewer will follow and the result will be much less than we want it to be. I reserve the remainder of my time.

Mr. LIEBERMAN. I want to assure the Senator from Maryland----

Mr. LIEBERMAN. Since the Senator from Maryland has questioned my legal capacity, I want to----

Mr. LIEBERMAN. And I am adding it----

Mr. LIEBERMAN

Mr. LIEBERMAN. Mr. President, I rise today to express my heartfelt congratulations to a former long-time Connecticut resident and member of the Yale University faculty, Professor John B. Fenn, for being jointly awarded the 2002 Nobel Prize in Chemistry, the world's highest honor for scientific achievement. I cannot imagine another person for whom this prestigious award is more richly deserved. Professor Fenn has conducted pioneering research on powerful analytical methods for studying biological macromolecules such as proteins. His work has revolutionized the development of new medicines and has broken new ground in the early diagnosis of certain cancers. The possibility of analyzing proteins in detail has led to an increased understanding of the processes of life. Because of the advances resulting from Professor Fenn's work, researchers can now rapidly and simply identify the constituent proteins contained within a substance. They can also create three-dimensional pictures showing what protein molecules look like in solution in order to better understand their functions within a cell. In addition to assisting the diagnosis of breast and prostate cancer, applications of this groundbreaking area of research are also being reported in other areas; for example, foodstuff control, pharmaceutical development, environmental analysis, and the diagnosis of malaria. Mass spectrometry is a very important analytical method used in practically all chemistry laboratories the world over. This process lets scientists rapidly identify a substance and is used in areas such as testing for doping and illegal drugs. For much of the 20th century, the technique had been used to identify only small-or medium-sized molecules. In the latter half of the 1980s, Professor Fenn and his colleague Koichi Tanaka, with whom he is sharing the prize, developed methods that make it possible to analyze biological macromolecules as well. Professor Fenn has been honored for finding ways to extend the technique to large molecules by making the individual molecules separate and spread out as a cloud in a gas without losing their original structure. In the method that he published in 1988, electrospray ionisation--ESI--charged droplets of protein solution are produced which shrink as the water evaporates. Eventually, freely hovering protein ions remain, and their masses may then be determined by setting them in motion and measuring their time of flight over a known distance. Professor Fenn received a B.A. in chemistry from Berea College in 1937 and a Ph.D. from Yale in 1940. After a dozen years in industry, he was appointed director of Project SQUID, a Navy program of basic and applied research in jet propulsion administered by Princeton University, where he later became professor of aerospace and mechanical sciences in 1959. He returned to Yale in 1967 as professor of applied science and chemistry, a post he held for 13 years. From 1980 until his retirement in 1987, he was a professor of chemical engineering. He became a research scientist at Yale after being named Emeritus in 1987. In 1994, he moved to Virginia Commonwealth University as a research professor. He has served as a visiting professor at Trento University in Italy, the University of Tokyo, the Indian Institute of Science at Bangalore, and the Chinese Academy of Science in Beijing, and as a distinguished lecturer at several other institutions. Author of one book and over a hundred papers, he is sole or co-inventor on 19 patents. Much of his research has centered on the properties and uses of supersonic free jets expanding into vacuum. Such jets can produce molecular beams with much higher intensities and energies than can the classical effusion ovens they have replaced. Their ability to cool molecules to ultra low temperatures, with or without condensation, has revolutionized molecular spectroscopy and made them versatile sources of clusters and van der Waals molecules. In mass spectrometry, Professor Fenn is best known for his work in the development and applications of electrospray ionization. I speak with utmost sincerity in expressing my gratitude to Professor Fenn for the lifetime of contributions or, more accurately, several lifetimes' worth of contributions that he has rendered in service to our Nation in his research on mass spectrometry. The work resulting from his drive and genius will no doubt improve our lives and our society, and it fills me with exceptional pride to see him recognized for his efforts. Outstanding scientists such as he undertake research to fully realize human and societal potential, and by having had someone as accomplished as Professor Fenn on its faculty, both Connecticut and Yale University have greatly benefited from his groundbreaking work. On behalf of your State and your country, Professor Fenn, please accept my deepest congratulations and thanks.