LOANS for Biomedical Research Act
Bill: H.R.3437 | Sponsor: Rep. Rush, Bobby L. (D-IL)
Policy area: Health

Summary:
Long-term Opportunities for Advancing New Studies for Biomedical Research Act or the LOANS for Biomedical Research Act
This bill requires the Department of Health and Human Services (HHS), in consultation with the Department of the Treasury, to establish the Biobonds Program to support loans for clinical trials for eligible drugs and medical devices.
Specifically, Treasury must contract with institutions to act as fiscal agents to carry out the program. Fiscal agents must (1) purchase loans made to borrowers engaged in eligible biomedical research activities, and (2) sell bonds comprised of such loans. HHS shall guarantee a portion of the bond payments.
An eligible borrower under this program is one conducting (or seeking to conduct) research related to a drug or device that is (1) intended to meet an unmet medical need; and (2) under investigation in certain types of controlled clinical trials, including a trial to investigate the safety and effectiveness of the drug or device.
HHS must issue rules relating to various aspects of the program, including rules concerning (1) which loans should be prioritized for purchase, (2) the terms and conditions of the loans, and (3) the size of each bond issuance. Treasury must issue rules relating to the program's underwriting practices and compensation for the fiscal agents.
The Government Accountability Office must periodically report to Congress on the program, including an analysis of the risk to the government in guaranteeing the bonds.

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 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 Health and Human Services, in 
consultation with the Secretary of the Treasury, 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 (as determined by the 
Secretary of the Treasury), receive financial assistance through--
            (1) the purchasing of loans by fiscal agents under section 
        3; and
            (2) the sale and guarantee of Biobonds comprised of these 
        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 Health and Human 
        Services, in consultation with the Secretary of the Treasury, 
        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 for the purpose of 
        conducting the applicable clinical trial; 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 Loans.--The Secretary of Health and Human Services 
shall issue rules to require fiscal agents, in purchasing loans under 
this section, to--
            (1) purchase loans with respect to a diverse range of 
        biomedical projects and not to favor one disease or disability, 
        but with priority given to loans with potential to address 
        unmet public health needs across the spectrum of diseases and 
        disabilities;
            (2) consider as an important criterion for purchasing loans 
        with respect to clinical trials that they are being conducted 
        by women researchers or researchers who are members of a racial 
        and ethnic minority group or disabled; and
            (3) prioritize purchasing loans with respect to clinical 
        trials that include, where appropriate, representative levels 
        of women, members of a racial and ethnic minority groups, 
        disabled individuals, and other diverse participants, as 
        specified in guidance issued under section 505(b) of the 
        Federal Food, Drug, and Cosmetic Act.
    (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.--The Secretary of Health and Human 
Services, in consultation with the Secretary of the Treasury, shall 
issue rules to--
            (1) establish criteria for the terms for loans that are 
        eligible for purchase under this section;
            (2) 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--
                    (A) prevailing market conditions;
                    (B) taxpayer protection; and
                    (C) the need to ensure ample funding for clinical 
                trials described under section 2; and
            (3) 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.

SEC. 4. BIOBONDS.

    (a) Issuance.--The fiscal agents shall issue bonds, to be known as 
``BioBonds'', collateralized by loans purchased under this Act, and 
sell the BioBonds to investors.
    (b) BioBond Guarantee.--The Secretary of Health and Human Services 
shall provide a guarantee on the payment of principal (but not the 
payment of interest) for each BioBond, on a bond-by-bond basis, in an 
amount to be determined by the Secretary, but in no case may the amount 
of such guarantee be more than 90 percent of the principal of the 
BioBond.
    (c) Size of Issuances.--The Secretary of Health and Human Services, 
in consultation with the Secretary of the Treasury, shall establish the 
size of each BioBond issuance, to ensure market acceptance, portfolio 
diversification, and the protection of taxpayer interests.
    (d) Auctions.--The Secretary of Health and Human Services 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 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 Government.
    (e) Portfolio Diversity.--With respect to an issuance of BioBonds 
and the loans collateralizing such issuance, no more 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).
    (f) Prioritization of Taxpayer Interests.--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 are first used to reduce the amount of principal 
        guaranteed by the Secretary of Health and Human Services; and
            (2) the Secretary of Health and Human Services has a senior 
        claim on all assets and collateral under a BioBond to the 
        extent the guarantee provided by the Secretary is not 
        extinguished.

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 of Health and Human Services, in 
consultation with the Secretary of the Treasury, 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 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 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 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 Health and Human Services to pay for the cost of 
guaranteeing BioBonds under this Act $10,000,000,000 for each of fiscal 
years 2022, 2023, and 2024.
    (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 Health and Human 
        Services 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 bond issuer into the 
                Treasury has been made in a sufficient amount to cover 
                the full cost of the guarantee.
            (3) Cost of guarantees.--
                    (A) In general.--The Secretary of Health and Human 
                Services shall charge and collect fees for guarantees 
                under this Act in amounts the Secretary determines are 
                sufficient to recover applicable administrative 
                expenses.
                    (B) Availability.--Fees collected under this 
                subsection--
                            (i) shall be deposited by the Secretary 
                        into the Treasury; and
                            (ii) are authorized to remain available 
                        until expended.

SEC. 8. DEFINITIONS.

    In this Act:
            (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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