39–010

Calendar No. 117

109TH CONGRESS REPORT " SENATE ! 1st Session 109–75

FOUNDATION FOR THE NATIONAL INSTITUTES OF 

HEALTH IMPROVEMENT ACT 

MAY 26, 2005.—Ordered to be printed 

Mr. ENZI, from the Committee on Health, Education, Labor, and 

Pensions, submitted the following 

R E P O R T 

[To accompany S. 302]

The Committee on Health, Education, Labor, and Pensions, to 

which was referred the bill (S. 302) to make improvements in the 

Foundation for the National Institutes of Health, having considered 

the same, reports favorably thereon with an amendment and recommends that the bill, as amended, do pass.

CONTENTS 

Page 

I. Purpose and summary of the bill ................................................................. 1

II. Background and need for legislation ............................................................ 2

III. Legislative history and committee action .................................................... 2

IV. Explanation of bill and committee views ..................................................... 2

V. Cost estimate .................................................................................................. 3

VI. Application of law to the legislative branch ................................................ 4

VII. Regulatory impact statement ........................................................................ 4

VIII. Section-by-section analysis ............................................................................ 4

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

I. PURPOSE AND SUMMARY OF THE BILL

The purpose of S. 302, the Foundation for the National Institutes 

of Health Improvement Act, is to make technical corrections and 

improvements to Section 499 of the Public Health Service Act 

(PHSA), which established the Foundation for the National Institutes of Health (the Foundation). Most significantly, these corrections clarify membership in the Foundation’s board of directors and 

assure that the Foundation receives funds from the National Institutes of Health (NIH) to support the Foundation’s administrative 

and operating expenses. 

2

II. BACKGROUND AND NEED FOR LEGISLATION

The Foundation is a private, not-for-profit foundation established 

by Congress to raise private funds to support the work of the NIH. 

Authorized in 1990 and incorporated as a nonprofit organization in 

Maryland 9 years ago, the Foundation in 2003 raised $426 in private funds for every $1 that the Foundation received from the NIH, 

and 85 percent of the money the Foundation spent in 2003 directly 

supported the programs and initiatives of the NIH, with 15 percent 

used for administration and fundraising. Since its inception, the 

Foundation has raised $276.5 million or $66 in private support for 

every appropriated dollar received. 

The Foundation is currently managing 38 programs that are sup- ported by $276.5 million generated from private contributions. In 

2003, Bill Gates announced a gift to the Foundation for NIH of 

$200 million to establish the Grand Challenges in Global Health 

initiative, supporting research on global health priorities. When the 

Congress passed the Best Pharmaceuticals for Children Act in 2001 

(P.L. 107–109), it charged the Foundation with collecting private 

funds to study drugs in children. The Foundation’s role with the 

NIH is expected to continue to grow productively in the coming 

years. 

One current project is the construction of the Edmond J. Safra 

Family Lodge on the NIH campus. Families of patients receiving 

in-patient treatment at the NIH Clinical Center will have the 

Lodge as a place to stay, at no cost to them. The project is funded 

completely by private funds donated through the Foundation, with 

services and land donated by the NIH. In addition, the Foundation 

currently has partnerships with the NIH that include helping develop new cancer treatments, two initiatives identifying biomarkers 

for Osteoarthritis and Alzheimer’s Disease, and others that highlight the great promise of genomics. Through a public-private partnership, the Foundation helped accelerate the sequencing of the 

mouse genome. The operating costs for the Foundation climbed from the $0.944 million in 2002 to $3.09 million in 2005. The Bill & Melinda Gates 

Foundation provides an additional $2.25 million in funding to cover 

the direct costs associated with the Grand Challenges initiative; 

however, the Foundation will also expand its staffing for media relations and communications functions, as well as staffing for its 

public-private partnerships. 

III. LEGISLATIVE HISTORY AND COMMITTEE ACTION

On February 7, 2005, Senator Kennedy, for himself and Senator 

Gregg, Senator Frist, Senator Enzi, and Senator Bingaman, introduced S. 302, to amend Section 499 of the PHSA to improve the 

Foundation for the National Institutes of Health. On February 9, 

2005, the committee held an executive session to consider S. 302. 

After accepting a manager’s amendment, the committee approved 

S. 302 by unanimous voice vote. 

IV. EXPLANATION OF BILL AND COMMITTEE VIEWS

In the past, the Foundation has been provided $500,000 through 

the NIH appropriation to help defray its operating and administrative costs. The legislation will correct the current need for a yearly 

3

line appropriation of $500,000 for the Foundation in the NIH appropriation bill, and will allow the Foundation to continue its effective support for the work and the mission of the NIH. The legislation permits the NIH to support the work of the Foundation beyond 

the $500,000 baseline if, in the judgment of the NIH Director, an 

occasion were to arise that would warrant it. 

In addition, when Congress charged the Foundation with collecting private funds to study drugs in children in the BPCA, it 

added the Commissioner of Food and Drugs as an ex officio member of the board of the Foundation. This addition failed to take account of the fact that, under Section 499(d)(I)(D)(ii) of the PHSA, 

the terms of service of the original ex officio members of the board 

(the chair and ranking minority member of the Subcommittee on 

Health and the Environment of the House Energy and Commerce 

Committee, the chair and ranking minority member of the Senate 

Committee on Labor and Human Resources, and the Director of 

NIH) terminated on appointment of the initial board. The legislation maintains the policy that the terms of service of the congressional members of the board terminated upon initial appointment 

of the board, but clarifies that the NIH Director and the FDA Commissioner remain as ex officio members of the board.

V. COST ESTIMATE

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, February 14, 2005. 

Hon. MIKE B. ENZI, 

Chairman, Committee on Health, Education, Labor, and Pensions, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 302, the Foundation for the 

National Institutes of Health Improvement Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Christopher Topoleski. 

Sincerely, 

ELIZABETH M. ROBINSON, 

(For Douglas Holtz-Eakin, Director). 

Enclosure. 

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

S. 302 would modify the Public Health Service Act to change the 

law that governs the Foundation for the National Institutes of 

Health (NIH), a private, not-for-profit entity that raises private 

funds to support the work of NIH. It would specify that the Director of the National Institutes of Health and the Commissioner of 

the Food and Drug Administration remain as ex officio members of 

the board, make provisions for the continued operation of the board 

when vacancies occur, and correct an incorrect cross-reference in 

the statute. The bill also would require that $500,000 out of funds 

appropriated for NIH be transferred to the foundation each year. 

Such annual payments are authorized under current law but are 

not required. 

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CBO estimates that implementing S. 302 would have no significant budgetary effect in any individual year. Enacting the bill 

would not affect receipts or direct spending. 

S. 302 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would impose no costs on state, local, or tribal governments. 

The CBO staff contact is Christopher Topoleski. This estimate 

was approved by Peter H. Fontaine, Deputy Assistance Director for 

Budget Analysis. 

VI. APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

S. 302 amends Section 499 of the PHSA to make improvements 

to the functioning of the Foundation for the National Institutes of 

Health, a non-profit corporation in the State of Maryland that supports the work of the NIH. As such, it has no application to the 

legislative branch. 

VII. REGULATORY IMPACT STATEMENT

The committee has determined that there will be de minimus 

changes to the regulatory burden due to this bill. 

VIII. SECTION-BY-SECTION ANALYSIS

Sec. 1. Short title 

Sec. 2. National Institutes of Health establishment and duties 

Paragraph (1)(A) makes a technical amendment to clarify that 

the NIH Director and the FDA Commissioner will serve as ex officio members of the board of the Foundation. 

Paragraph (1)(B) clarifies an ambiguous provision of current law 

and codifies current policy under which new members of the Foundation’s board are appointed under the bylaws of the Foundation. 

Paragraph (1)(C) makes a conforming amendment. 

Paragraph (2)(A) corrects an incorrect cross-reference in section 

499 of the PHSA. 

Paragraph (2)(B) requires the Foundation’s annual reports to include an accounting of the use of funds transferred from the NIH 

to the Foundation for its operating expenses and that these reports 

be provided to the appropriate committees in Congress. 

Paragraph (2)(C) makes a technical correction to clarify that the 

NIH may accept transfers of funds from the Foundation. 

Paragraph (3) makes a change to require the NIH Director to 

transfer no less than $500,000 and no more than $1,250,000 to the 

Foundation for operating expenses.

IX. CHANGES IN EXISTING LAW

In compliance with rule XXVI paragraph 12 of the Standing 

Rules of the Senate, the following provides a print of the statute 

or the part or section thereof to be amended or replaced (existing 

law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, existing law in which no change is proposed 

is shown in roman): 

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PUBLIC HEALTH SERVICE ACT 

* * * * * * *

PART I—FOUNDATION FOR THE NATIONAL INSTITUTES 

OF HEALTH 

SEC. 499. ESTABLISHMENT AND DUTIES OF FOUNDATION. 

(a) IN GENERAL.—***

* * * * * * *

(d) BOARD OF DIRECTORS.—

(1) COMPOSITION.—

(A) * * *

* * * * * * *

(D)(i) * * *

* * * * * * *

ø(ii) Upon the appointment of the members of the Board 

under clause (i)(II), the terms of service of the ex officio 

members of the Board as members of the Board shall terminate.¿

(ii) Upon the appointment of the appointed members of 

the Board under clause (i)(II), the terms of service as members of the Board of the ex officio members of the Board described in clauses (i) and (ii) of subparagraph (B) shall terminate. The ex officio members of the Board described in 

clauses (iii) and (iv) of subparagraph (B) shall continue to 

serve as ex officio members of the Board.

* * * * * * *

(G) The Board may, through amendments to the bylaws 

of the Foundation, provide that the number of appointed

members of the Board shall be greater than the number 

specified in subparagraph (C). 

* * * * * * *

(3) TERMS AND VACANCIES.— (A) * * *

ø(B) Any vacancy in the membership of the Board shall 

be filled in the manner in which the original position was 

made and shall not affect the power of the remaining 

members to execute the duties of the Board.¿

(B) Any vacancy in the membership of the appointed 

members of the Board shall be filled in accordance with the 

bylaws of the Foundation established in accordance with 

paragraph (6), and shall not affect the power of the remaining appointed members to execute the duties of the Board.

* * * * * * *

(5) MEETINGS AND QUORUM.—A majority of the appointed

members of the Board shall constitute a quorum for purposes 

of conducting the business of the Board. 

* * * * * * *

(j) GENERAL PROVISIONS.—

(1) FOUNDATION INTEGRITY.—***

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(2) FINANCIAL CONFLICTS OF INTEREST.—Any individual who 

is an officer, employee, or member of the Board of the Foundation may not (in accordance with policies and requirements developed under subsection ø(d)(2)(B)(i)(II)¿ (d)(6) personally or 

substantially participate in the consideration or determination 

by the Foundation of any matter that would directly or predictably affect any financial interest of the individual or a relative 

affect any financial interest of the individual or a relative (as 

such term is defined in section 109(16) of the Ethics in Government Act of 1978) of the individual, of any business organization or other entity, or of which the individual is an officer or 

employee, or is negotiating for employment, or in which the individual has any other financial interest. 

* * * * * * * 

(4) REPORTS.—

(A) Not later than 5 months following the end of each 

fiscal year, the Foundation shall publish a report describing the activities of the Foundation during the preceding 

fiscal year. Each such report shall include for the fiscal 

year involved a comprehensive statement of the operations, activities, financial condition, and accomplishments 

of the Foundation, including an accounting of the use of 

amounts transferred under subsection (l). 

* * * * * * * 

ø(C) The Foundation shall make copies of each report 

submitted under subparagraph (A) available for public inspection, and shall upon request provide a copy of the report to any individual for a charge not exceeding the cost 

of providing the copy.¿

(C) The Foundation shall make copies of each report submitted under subparagraph (A) available—

(i) for public inspection, and shall upon request provide a copy of the report to any individual for a charge 

that shall not exceed the cost of providing the copy; and 

(i) to the appropriate committees of Congress.

* * * * * * * 

(10) TRANSFER OF FUNDS.—The Foundation may transfer 

funds to the National Institutes øof Health.¿ of Health and the 

National Institutes of Health may accept transfers of funds 

from the Foundation.

* * * * * * * 

ø(1) FUNDING.—

ø(1) AUTHORIZATION OF APPROPRIATIONS.—For the purpose of 

carrying out this part, there is authorized to be appropriated 

an aggregate $500,000 for each fiscal year. 

ø(2) LIMITATION REGARDING OTHER FUNDS.—Amounts appropriated under any provision of law other than paragraph (1) 

may not be expended to establish or operate the Foundation.¿

(l) FUNDING.—From amounts appropriated to the National Institutes of Health, for each fiscal year, the Director of NIH shall transVerDate jul 14 2003 02:05 May 28, 2005 Jkt 039010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6603 E:\HR\OC\SR075.XXX SR075
7

fer not less than $500,000 and not more than $1,250,000 to the 

Foundation.

* * * * * * *

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