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[Senate Report 108-45]
[From the U.S. Government Publishing Office]

                                                        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.

                          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 havethe 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 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.
    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

           *       *       *       *       *       *       *

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) * * *
                          [(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) * * *
                  [(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 developed under subsection 
        [(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 Institutes[ 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.
    [(l) Duties of the Director.--
          [(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.
          [(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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