19–010

Calendar No. 92

108TH CONGRESS REPORT " SENATE ! 1st Session 108–45

FOUNDATION FOR THE NATIONAL INSTITUTES OF HEALTH 

IMPROVEMENT ACT

MAY 12, 2003.—Ordered to be printed 

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

Pensions, submitted the following 

R E P O R T 

[To accompany S. 314]

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

which was referred the bill (S. 314) to make improvements in the 

Foundation for the National Institutes of Health, having considered 

the same, reports favorably thereon without amendment and recommends that the bill do pass.

CONTENTS 

Page 

I. Purpose and Summary of Legislation .......................................................... 1

II. Committee Action .......................................................................................... 2

III. Background and Need for Legislation .......................................................... 2

IV. Cost Estimate ................................................................................................. 3

V. Application of Law to the Legislative Branch ............................................. 4

VI. Regulatory Impact Statement ....................................................................... 4

VII. Section-by-Section Analysis .......................................................................... 4

VIII. Changes in Existing Law .............................................................................. 4

I. PURPOSE AND SUMMARY OF LEGISLATION

The Foundation for the National Institutes of Health Improvement Act (S. 314) makes a number of technical corrections and improvements to section 499 of the 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 ensure that the Foundation receives funds from the National Institutes of Health (NIH) to support the Foundation’s administrative and operating expenses. 

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II. COMMITTEE ACTION

On February 5, 2003, Senator Kennedy, for himself and Senator 

Gregg, Senator Frist, and Senator Bingaman, introduced S. 314, to 

amend section 499 of the PHSA to improve the Foundation for the 

National Institutes of Health. On February 12, 2003, the Committee on Health, Education, Labor, and Pensions held an executive session to consider S. 314. The committee approved S. 314 by 

unanimous voice vote. 

III. 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 by section 499 of the PHSA and incorporated 

as a nonprofit organization in Maryland 7 years ago, the Foundation has raised $13 in private funds for every $1 it has received 

from the NIH to support the work of the NIH. 

By fall of 2002, the Foundation was managing 20 programs with multiyear revenue and funding goals of over $45 million. On January 26, 2003, the Gates Foundation announced a gift to the NIH 

through the Foundation of $200 million over the next 10 years to 

support research on global health priorities. In the Best Pharmaceuticals for Children Act (BPCA) (Pub. Law 107–109), Congress 

charged the Foundation with collecting private funds to study 

drugs in children. The Foundation’s role with the NIH is expected 

to grow 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 cancer 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; identifying biomarkers for 

osteoarthritis; and highlighting the great promise of genomics. 

Through a public-private partnership, the Foundation helped accelerate the sequencing of the mouse genome. 

The Foundation’s own operating costs include the cost of raising 

private funds to support the work of the NIH and the cost of administering and managing the use of those private funds. The operating costs for the Foundation are expected to climb from $860,000 

in 2002 to $2.2 million in 2003. The Gates Foundation is being 

asked to provide $1.2 million in funding to cover the majority of the 

costs associated with staff and office space to administer the new 

program on global health priorities. The Foundation will also expand its staffing for media relations and communications functions, 

as well as staffing for its public-private partnerships. 

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

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

line appropriation of $500,000 for the Foundation in the NIH appropriation bill, and will allow the Foundation to continue its effective support for the work and the mission of the NIH. The legislation is not intended to limit the ability of the NIH to support the 

work of the Foundation beyond the $500,000 baseline if, in the 

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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 into 

account the fact that, under section 499(d)(1)(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 terminate upon initial appointment of 

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

IV. COST ESTIMATE

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, March 24, 2003. 

Hon. JUDD GREGG, 

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. 314, 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, 

DOUGLAS HOLTZ-EAKIN, Director. 

Enclosure.

S. 314—Foundation for the National Institutes of Health Improvement Act 

S. 314 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 of the appropriations for NIH be transferred to the foundation. Such annual 

payments are authorized under current law but are not required. 

CBO estimates that implementing S. 314 would have no significant budgetary effect. Enacting the bill would not affect receipts or 

direct spending. 

S. 314 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. 

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The CBO staff contact is Christopher Topoleski. This estimate 

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

Budget Analysis. 

V. APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

S. 314 amends section 499 of the PHSA to make improvements 

to the functioning of the Foundation for the National Institutes of 

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

legislative branch. 

VI. REGULATORY IMPACT STATEMENT

The legislation amends section 499 of the PHSA to make improvements to the functioning of the Foundation for the National 

Institutes of Health. It includes a requirement that the Director of 

the NIH transfer $500,000 of the NIH’s appropriated funds to the 

Foundation to support its costs in supporting the work of the NIH. 

Accordingly, S. 314 is not expected to increase costs to government 

or to the private sector. 

VII. SECTION-BY-SECTION ANALYSIS

Sec. 1. Short title 

Designates the short title and reference as the ‘‘Foundation for 

the National Institutes of Health Improvement Act.’’ 

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 erroneous cross reference in section 

499 of the PHSA. 

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

NIH may accept transfers of funds from the Foundation. 

Paragraph (3) provides that the NIH Director shall transfer 

$500,000 annually to the Foundation for operating expenses.

VIII. CHANGES IN EXISTING LAW

In compliance with rule XXVI paragraph 12 of the Standing 

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

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

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

is shown in roman): 

PUBLIC HEALTH SERVICE ACT 

* * * * * * *

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FOUNDATION FOR THE NATIONAL INSTITUTES OF HEALTH

* * * * * * *

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 the remaining 

appointed members to execute the duties of the Board. 

* * * * * * *

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

members of the Board shall constitute a quorum for purposes 

of conducting the business of the Board. 

* * * * * * *

(j) GENERAL PROVISIONS.—

(1) FOUNDATION INTEGRITY.—* * *

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

is an officer, employee, or member of the Board of the Foundation may not (in accordance with policies and requirements deVerDate Jan 31 2003 06:39 May 14, 2003 Jkt 019008 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\SR045.XXX SR045
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veloped 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 

(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. 

* * * * * * *

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

funds to the National Institutesø of Health¿ of Health and the 

National Institutes of Health may accept transfers of funds 

from the Foundation. Any funds transferred under this paragraph shall be subject to all Federal limitations relating to federally-funded research. 

ø(l) DUTIES OF THE DIRECTOR.—

ø(1) APPLICABILITY OF CERTAIN STANDARDS TO NON-FEDERAL

EMPLOYEES.—In the case of any individual who is not an employee of the Federal Government and who serves in association with the National Institutes of Health, with respect to financial assistance received from the Foundation, the Foundation may not provide the assistance of, or otherwise permit the 

work at the National Institutes of Health to begin until a 

memorandum of understanding between the individual and the 

Director of the National Institutes of Health, or the designee 

of such Director, has been executed specifying that the individual shall be subject to such ethical and procedural standards of conduct relating to duties performed at the National Institutes of Health, as the Director of the National Institutes of 

Health determines is appropriate. 

ø(2) SUPPORT SERVICES.—The Director of the National Institutes of Health may provide facilities, utilities and support 

services to the Foundation if it is determined by the Director 

to be advantageous to the research programs of the National 

Institutes of Health.¿

(l) FUNDING.—From amounts appropriated to the National Institutes of Health, for each fiscal year, the Director of NIH shall transfer $500,000 to the Foundation. 

* * * * * * *

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