[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7539 Introduced in House (IH)]
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118th CONGRESS
2d Session
H. R. 7539
To require the Secretary of the Treasury 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
March 5, 2024
Mr. Fitzpatrick (for himself and Mr. Bishop of Georgia) introduced the
following bill; which was referred to the Committee on Energy and
Commerce
_______________________________________________________________________
A BILL
To require the Secretary of the Treasury 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 Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Long-term Opportunities for
Advancing New Studies for Biomedical Research Act'' or the ``LOANS for
Biomedical Research Act''.
SEC. 2. BIOBONDS PROGRAM.
(a) In General.--Not later than 180 days after the date of
enactment of this Act, the Secretary of the Treasury, in consultation
with the Secretary of Health and Human Services, shall establish a
program, to be known as the ``BioBonds Program'', to increase
innovative biomedical research into therapies to address unmet medical
needs, under which biomedical researchers seeking to conduct clinical
trials with respect to a drug or device, but who cannot secure
appropriate funding to conduct such trials, receive financial
assistance through--
(1) the purchasing of loans by fiscal agents under section
3; and
(2) the sale and guarantee of BioBonds collateralized by
such loans under section 4.
(b) Biomedical Researchers Eligible for Financial Assistance.--
(1) In general.--A person shall be eligible to receive a
loan under the BioBonds Program if such person is conducting or
seeking to conduct research with respect to a drug or device
that is--
(A) intended for use to meet an unmet medical need
(as determined by the Secretary of Health and Human
Services); and
(B) under investigation in a controlled clinical
trial under--
(i) an investigational drug application in
effect under section 505(i) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(i))
or section 351(a)(3) of the Public Health
Service Act (42 U.S.C. 262(a)(3)) (as
applicable); or
(ii) an investigational device exemption in
effect under section 520(g) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C.
360j(g)).
(2) Rulemaking.--The Secretary of the Treasury, in
consultation with the Secretary of Health and Human Services,
shall issue rules to carry out this subsection.
SEC. 3. PURCHASE OF LOANS BY FISCAL AGENTS.
(a) In General.--Fiscal agents shall purchase loans--
(1) made to an eligible recipient under section 2(b) for
the purpose of conducting the applicable clinical trial
described in that section; and
(2) with respect to which the fiscal agent determines that
the borrower has the ability to repay the loan, based on
collateral and financial capabilities and not on the prospects
for success of the clinical trial.
(b) Priority for Purchase of Loans.--The Secretary of the Treasury
shall issue rules to require fiscal agents, in purchasing loans under
this section, to purchase loans with respect to a diverse range of
biomedical projects and not to favor one disease or disability, and to
give priority to loans with potential to address unmet public health
needs across the spectrum of diseases and disabilities;
(c) Maximum Loan Amount.--A fiscal agent may not purchase loans in
any one year with respect to a single recipient in an amount more than
$25,000,000.
(d) Loan Terms and Conditions.--
(1) In general.--The Secretary of the Treasury, in
consultation with the Secretary of Health and Human Services,
shall issue rules--
(A) to establish criteria for the terms for loans
that are eligible for purchase under this section;
(B) to establish criteria for the interest rate for
loans that are eligible for purchase under this
section, which shall be based on applicable rates for
obligations of the Department of the Treasury of
comparable maturity plus a rate to be determined by the
Secretary of the Treasury to reflect--
(i) prevailing market conditions;
(ii) taxpayer protection; and
(iii) the need to ensure ample funding for
clinical trials described in section 2;
(C) in accordance with paragraph (2), to establish
an upfront fee of not greater than 1 percent of each
loan principal amount at origination to cover
administrative and financing costs associated with the
loans eligible for purchase under this section; and
(D) to permit the use of warrants and similar
instruments with respect to loans that are eligible for
purchase under this section, where necessary to protect
taxpayer interests.
(2) Fees.--
(A) In general.--Fees established under paragraph
(1)(C) shall be financed by addition of the appropriate
amount reflecting each upfront fee to the balance of
each loan upon origination and shall be collected in
concert with all loan payments collected by the fiscal
agent.
(B) Requirement.--If a loan is repaid ahead of its
stated maturity, becomes delinquent, or defaults, then
the full unpaid balance of a fee established under
paragraph (1)(C) that remains at such time shall be
added to the principal that must be fully satisfied.
SEC. 4. BIOBONDS.
(a) Issuance.--Each fiscal agent that purchases a loan under
section 3 shall issue bonds, to be known as ``BioBonds'',
collateralized by such loans, and sell the BioBonds to investors.
(b) BioBond Guarantee.--The Secretary of the Treasury shall provide
a guarantee of not greater than 90 percent of the payment of principal
(but not the payment of interest) for a BioBond.
(c) Auctions.--The Secretary of the Treasury may--
(1) authorize fiscal agents to use an auction to select the
purchasers of BioBonds; and
(2) require such auction to include a process that
minimizes the risk to the Federal Government of the Federal
guarantee involved by allowing bidders for a BioBond to compete
against each other by bidding on the percentage of the Federal
guarantee under subsection (b) with respect to the BioBond,
with the bid for the lowest percentage winning the auction,
taking into account other terms and conditions set by the
issuer to ensure the lowest total cost to the Federal
Government.
(d) Portfolio Diversity.--With respect to an issuance of BioBonds
and the loans collateralizing such issuance, not greater than 15
percent of the principal amount of such issuance may relate to a group
of related diseases or disabilities (as defined by the Secretary of
Health and Human Services).
(e) Prioritization of Taxpayer Interests.--All proceeds received
from Biobond issuance shall be invested in obligations of the Federal
Government in order to ensure a revenue stream in addition to loan
repayment that protects taxpayers. All BioBonds shall be structured to
give first priority to protecting the interests of the United States by
ensuring that--
(1) all cash proceeds received from the repayment of a
BioBond and income derived from loan-proceed reinvestment are
first used to reduce the amount of principal guaranteed by the
Secretary of the Treasury;
(2) the Secretary of the Treasury has a senior claim on all
assets and collateral under a BioBond to the extent the
guarantee provided by the Secretary is not extinguished; and
(3) to the extent that a Biobond is fully repaid without
resort to the guarantee, all proceeds from reinvested funds
shall be the property of the United States.
(f) Rule of Construction.--Nothing in this section may be construed
to prohibit underwriters from varying terms and conditions consistent
with the rules issued by the Secretary of the Treasury with respect to
BioBonds.
SEC. 5. FISCAL AGENTS.
(a) In General.--The Secretary of the Treasury shall contract with
institutions to carry out the duties of fiscal agents under this Act,
under such criteria as the Secretary determines appropriate.
(b) Sound Underwriting Practices.--The Secretary of the Treasury
shall issue rules to ensure that fiscal agents use sound underwriting
practices that protect the interests of--
(1) the United States;
(2) BioBond investors; and
(3) the long-term promotion of innovative biomedical
research into therapies to address unmet medical needs.
(c) Compensation.--A fiscal agent shall be compensated for
performing duties under this Act from the proceeds from the sale of
Biobonds issued by the fiscal agent, at such rate and on such terms as
the Secretary of the Treasury may provide.
(d) Rulemaking.--Not later than 180 days after the date of
enactment of this Act, the Secretary of the Treasury shall issue final
rules to carry out this section.
SEC. 6. REPORTS.
(a) GAO Study and Reports on Other Research Projects.--
(1) Ongoing study.--The Comptroller General of the United
States shall carry out an ongoing study to consider whether a
program similar to the BioBonds Program should be established
for other biomedical research projects.
(2) Report.--The Comptroller General shall issue a report
to the Congress, not less frequently than annually, on all
findings and determinations made in carrying out the study
required under paragraph (1).
(b) Reports on the BioBonds Program.--Not later than 2 years after
the date on which BioBonds are first issued, and annually thereafter
during the period ending on the date that is 4 years after the date on
which BioBonds are first issued, the Comptroller General and the
Secretary of the Treasury, in consultation with the Secretary of Health
and Human Services, shall each issue a separate report to the Congress
on--
(1) the progress of the issuance of BioBonds;
(2) the reasons for any problems achieving desired volumes
of BioBonds or the ability of the BioBonds Program to proceed
at a faster pace;
(3) an analysis of the risk to the Government in providing
the Federal guarantee described under section 4(b);
(4) any recommended improvements to the BioBonds Program;
and
(5) any other matter that the Comptroller General or the
Secretary, respectively, determines is appropriate.
SEC. 7. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--There is authorized to be appropriated to the
Secretary of the Treasury to pay for the cost of guaranteeing BioBonds
under this Act $10,000,000,000 for each of fiscal years 2025, 2026, and
2027.
(b) Program Funding.--
(1) Administrative expenses paid from bond sales.--Except
as provided under paragraph (2), the cost of carrying out this
Act, including the cost to the Secretary of the Treasury in
administering the BioBond Program, shall be recovered from the
proceeds from the sale of BioBonds or from fees as set forth in
paragraph (3).
(2) Specific appropriation or contribution.--No guarantee
shall be made under this Act unless--
(A) an appropriation for the full cost of the
guarantee has been made;
(B) the Secretary has received from the BioBond
issuer a payment in full for the cost of the guarantee;
or
(C) a combination of an appropriation and the
deposit of a payment from the BioBond issuer has been
made in a sufficient amount to cover the full cost of
the guarantee.
(3) Guarantee fees.--The Secretary of the Treasury shall
charge and collect fees for guarantees under this Act in
amounts the Secretary determines are sufficient to recover
applicable administrative expenses, and such fees--
(A) shall be available to the Secretary, without
further appropriation, to pay for the administrative
expenses related to guarantees under this Act; and
(B) are authorized to remain available until
expended.
SEC. 8. DEFINITIONS.
In this Act, the following definitions apply:
(1) Cost.--The term ``cost'' has the meaning given to the
term ``cost of a loan guarantee'' in section 502(5)(C) of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(C)).
(2) Eligible recipient.--The term ``eligible recipient''
means a person described under section 2(b).
(3) Fiscal agent.--The term ``fiscal agent'' means a person
selected as a fiscal agent under section 5(a).
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