LOANS for Biomedical Research Act

I 117TH CONGRESS 1ST SESSION H. R. 3437 To require the Secretary of Health and Human Services to guarantee BioBonds in order to provide funding for loans to eligible biomedical companies and universities to carry out clinical trials approved by the Food and Drug Administration, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 20, 2021 Mr. RUSH (for himself, Mr. FITZPATRICK, Mr. BISHOP of Georgia, Mr. CAR- SON, Mr. COHEN, Mr. COOPER, Mr. DANNY K. DAVIS of Illinois, Mr. GRIJALVA, Mr. LEVIN of California, Mr. SCHNEIDER, Ms. SEWELL, and Mr. THOMPSON of Mississippi) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To require the Secretary of Health and Human Services to guarantee BioBonds in order to provide funding for loans to eligible biomedical companies and universities to carry out clinical trials approved by the Food and Drug Administration, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Long-term Opportuni- 4 ties for Advancing New Studies for Biomedical Research 5 Act’’ or the ‘‘LOANS for Biomedical Research Act’’. 6 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3437 IH SEC. 2. BIOBONDS PROGRAM. 1 (a) IN GENERAL.—Not later than 180 days after the 2 date of enactment of this Act, the Secretary of Health and 3 Human Services, in consultation with the Secretary of the 4 Treasury, shall establish a program, to be known as the 5 ‘‘Biobonds Program’’, to increase innovative biomedical 6 research into therapies to address unmet medical needs, 7 under which biomedical researchers seeking to conduct 8 clinical trials with respect to a drug or device, but who 9 cannot secure appropriate funding to conduct such trials 10 (as determined by the Secretary of the Treasury), receive 11 financial assistance through— 12 (1) the purchasing of loans by fiscal agents 13 under section 3; and 14 (2) the sale and guarantee of Biobonds com- 15 prised of these loans under section 4. 16 (b) BIOMEDICAL RESEARCHERS ELIGIBLE FOR FI- 17 NANCIAL ASSISTANCE.— 18 (1) IN GENERAL.—A person shall be eligible to 19 receive a loan under the Biobonds Program if such 20 person is conducting or seeking to conduct research 21 with respect to a drug or device that is— 22 (A) intended for use to meet an unmet 23 medical need (as determined by the Secretary of 24 Health and Human Services); and 25 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3437 IH (B) under investigation in a controlled 1 clinical trial under— 2 (i) an investigational drug application 3 in effect under section 505(i) of the Fed- 4 eral Food, Drug, and Cosmetic Act (21 5 U.S.C. 355(i)) or section 351(a)(3) of the 6 Public Health Service Act (42 U.S.C. 7 262(a)(3)) (as applicable); or 8 (ii) an investigational device exemp- 9 tion in effect under section 520(g) of the 10 Federal Food, Drug, and Cosmetic Act (21 11 U.S.C. 360j(g)). 12 (2) RULEMAKING.—The Secretary of Health 13 and Human Services, in consultation with the Sec- 14 retary of the Treasury, shall issue rules to carry out 15 this subsection. 16 SEC. 3. PURCHASE OF LOANS BY FISCAL AGENTS. 17 (a) IN GENERAL.—Fiscal agents shall purchase 18 loans— 19 (1) made to an eligible recipient for the purpose 20 of conducting the applicable clinical trial; and 21 (2) with respect to which the fiscal agent deter- 22 mines that the borrower has the ability to repay the 23 loan, based on collateral and financial capabilities 24 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3437 IH and not on the prospects for success of the clinical 1 trial. 2 (b) PRIORITY FOR LOANS.—The Secretary of Health 3 and Human Services shall issue rules to require fiscal 4 agents, in purchasing loans under this section, to— 5 (1) purchase loans with respect to a diverse 6 range of biomedical projects and not to favor one 7 disease or disability, but with priority given to loans 8 with potential to address unmet public health needs 9 across the spectrum of diseases and disabilities; 10 (2) consider as an important criterion for pur- 11 chasing loans with respect to clinical trials that they 12 are being conducted by women researchers or re- 13 searchers who are members of a racial and ethnic 14 minority group or disabled; and 15 (3) prioritize purchasing loans with respect to 16 clinical trials that include, where appropriate, rep- 17 resentative levels of women, members of a racial and 18 ethnic minority groups, disabled individuals, and 19 other diverse participants, as specified in guidance 20 issued under section 505(b) of the Federal Food, 21 Drug, and Cosmetic Act. 22 (c) MAXIMUM LOAN AMOUNT.—A fiscal agent may 23 not purchase loans in any one year with respect to a single 24 recipient in an amount more than $25,000,000. 25 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3437 IH (d) LOAN TERMS AND CONDITIONS.—The Secretary 1 of Health and Human Services, in consultation with the 2 Secretary of the Treasury, shall issue rules to— 3 (1) establish criteria for the terms for loans 4 that are eligible for purchase under this section; 5 (2) establish criteria for the interest rate for 6 loans that are eligible for purchase under this sec- 7 tion, which shall be based on applicable rates for ob- 8 ligations of the Department of the Treasury of com- 9 parable maturity plus a rate to be determined by the 10 Secretary of the Treasury to reflect— 11 (A) prevailing market conditions; 12 (B) taxpayer protection; and 13 (C) the need to ensure ample funding for 14 clinical trials described under section 2; and 15 (3) permit the use of warrants and similar in- 16 struments with respect to loans that are eligible for 17 purchase under this section, where necessary to pro- 18 tect taxpayer interests. 19 SEC. 4. BIOBONDS. 20 (a) ISSUANCE.—The fiscal agents shall issue bonds, 21 to be known as ‘‘BioBonds’’, collateralized by loans pur- 22 chased under this Act, and sell the BioBonds to investors. 23 (b) BIOBOND GUARANTEE.—The Secretary of 24 Health and Human Services shall provide a guarantee on 25 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3437 IH the payment of principal (but not the payment of interest) 1 for each BioBond, on a bond-by-bond basis, in an amount 2 to be determined by the Secretary, but in no case may 3 the amount of such guarantee be more than 90 percent 4 of the principal of the BioBond. 5 (c) SIZE OF ISSUANCES.—The Secretary of Health 6 and Human Services, in consultation with the Secretary 7 of the Treasury, shall establish the size of each BioBond 8 issuance, to ensure market acceptance, portfolio diver- 9 sification, and the protection of taxpayer interests. 10 (d) AUCTIONS.—The Secretary of Health and 11 Human Services may— 12 (1) authorize fiscal agents to use an auction to 13 select the purchasers of BioBonds; and 14 (2) require such auction to include a process 15 that minimizes the risk to the Government of the 16 Federal guarantee involved by allowing bidders for a 17 BioBond to compete against each other by bidding 18 on the percentage of the Federal guarantee under 19 subsection (b) with respect to the BioBond, with the 20 bid for the lowest percentage winning the auction, 21 taking into account other terms and conditions set 22 by the issuer to ensure the lowest total cost to the 23 Government. 24 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3437 IH (e) PORTFOLIO DIVERSITY.—With respect to an 1 issuance of BioBonds and the loans collateralizing such 2 issuance, no more than 15 percent of the principal amount 3 of such issuance may relate to a group of related diseases 4 or disabilities (as defined by the Secretary of Health and 5 Human Services). 6 (f) PRIORITIZATION OF TAXPAYER INTERESTS.—All 7 BioBonds shall be structured to give first priority to pro- 8 tecting the interests of the United States by ensuring 9 that— 10 (1) all cash proceeds received from the repay- 11 ment of a BioBond are first used to reduce the 12 amount of principal guaranteed by the Secretary of 13 Health and Human Services; and 14 (2) the Secretary of Health and Human Serv- 15 ices has a senior claim on all assets and collateral 16 under a BioBond to the extent the guarantee pro- 17 vided by the Secretary is not extinguished. 18 SEC. 5. FISCAL AGENTS. 19 (a) IN GENERAL.—The Secretary of the Treasury 20 shall contract with institutions to carry out the duties of 21 fiscal agents under this Act, under such criteria as the 22 Secretary of Health and Human Services, in consultation 23 with the Secretary of the Treasury, determines appro- 24 priate. 25 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3437 IH (b) SOUND UNDERWRITING PRACTICES.—The Sec- 1 retary of the Treasury shall issue rules to ensure that fis- 2 cal agents use sound underwriting practices that protect 3 the interests of— 4 (1) the United States; 5 (2) BioBond investors; and 6 (3) the long-term promotion of innovative bio- 7 medical research into therapies to address unmet 8 medical needs. 9 (c) COMPENSATION.—A fiscal agent shall be com- 10 pensated for performing duties under this Act from the 11 proceeds from the sale of Biobonds issued by the fiscal 12 agent, at such rate and on such terms as the Secretary 13 of the Treasury may provide. 14 (d) RULEMAKING.—Not later than 180 days after the 15 date of enactment of this Act, the Secretary of the Treas- 16 ury shall issue final rules to carry out this section. 17 SEC. 6. REPORTS. 18 (a) GAO STUDY AND REPORTS ON OTHER RE- 19 SEARCH PROJECTS.— 20 (1) ONGOING STUDY.—The Comptroller Gen- 21 eral of the United States shall carry out an ongoing 22 study to consider whether a program similar to the 23 BioBonds Program should be established for other 24 biomedical research projects. 25 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3437 IH (2) REPORT.—The Comptroller General shall 1 issue a report to the Congress, not less frequently 2 than annually, on all findings and determinations 3 made in carrying out the study required under para- 4 graph (1). 5 (b) REPORTS ON THE BIOBONDS PROGRAM.—Not 6 later than 2 years after the date on which BioBonds are 7 first issued, and annually thereafter during the period 8 ending on the date that is 4 years after the date on which 9 BioBonds are first issued, the Comptroller General and 10 the Secretary of Health and Human Services shall each 11 issue a separate report to the Congress on— 12 (1) the progress of the issuance of BioBonds; 13 (2) the reasons for any problems achieving de- 14 sired volumes of BioBonds or the ability of the Pro- 15 gram to proceed at a faster pace; 16 (3) an analysis of the risk to the Government 17 in providing the Federal guarantee described under 18 section 4(b); 19 (4) any recommended improvements to the Pro- 20 gram; and 21 (5) any other matter that the Comptroller Gen- 22 eral or the Secretary, respectively, determines is ap- 23 propriate. 24 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3437 IH SEC. 7. AUTHORIZATION OF APPROPRIATIONS. 1 (a) IN GENERAL.—There is authorized to be appro- 2 priated to the Secretary of Health and Human Services 3 to pay for the cost of guaranteeing BioBonds under this 4 Act $10,000,000,000 for each of fiscal years 2022, 2023, 5 and 2024. 6 (b) PROGRAM FUNDING.— 7 (1) ADMINISTRATIVE EXPENSES PAID FROM 8 BOND SALES.—Except as provided under paragraph 9 (2), the cost of carrying out this Act, including the 10 cost to the Secretary of Health and Human Services 11 in administering the BioBond Program, shall be re- 12 covered from the proceeds from the sale of BioBonds 13 or from fees as set forth in paragraph (3). 14 (2) SPECIFIC APPROPRIATION OR CONTRIBU- 15 TION.—No guarantee shall be made under this Act 16 unless— 17 (A) an appropriation for the full cost of 18 the guarantee has been made; 19 (B) the Secretary has received from the 20 BioBond issuer a payment in full for the cost 21 of the guarantee; or 22 (C) a combination of an appropriation and 23 the deposit of a payment from the bond issuer 24 into the Treasury has been made in a sufficient 25 amount to cover the full cost of the guarantee. 26 VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3437 IH (3) COST OF GUARANTEES.— 1 (A) IN GENERAL.—The Secretary of 2 Health and Human Services shall charge and 3 collect fees for guarantees under this Act in 4 amounts the Secretary determines are sufficient 5 to recover applicable administrative expenses. 6 (B) AVAILABILITY.—Fees collected under 7 this subsection— 8 (i) shall be deposited by the Secretary 9 into the Treasury; and 10 (ii) are authorized to remain available 11 until expended. 12 SEC. 8. DEFINITIONS. 13 In this Act: 14 (1) COST.—The term ‘‘cost’’ has the meaning 15 given to the term ‘‘cost of a loan guarantee’’ in sec- 16 tion 502(5)(C) of the Federal Credit Reform Act of 17 1990 (2 U.S.C. 661a(5)(C)). 18 (2) ELIGIBLE RECIPIENT.—The term ‘‘eligible 19 recipient’’ means a person described under section 20 2(b). 21 (3) FISCAL AGENT.—The term ‘‘fiscal agent’’ 22 means a person selected as a fiscal agent under sec- 23 tion 5(a). 24 Æ VerDate Sep 11 2014 05:29 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H3437.IH H3437 kjohnson on DSK79L0C42PROD with BILLS