Public Research in the Public Interest Act of 2006

Mr. President, I am pleased to join Senator Specter, along with Senators Landrieu and Lott, in introducing the ``Insurance Industry Antitrust Enforcement Act of 2006.''

In 1945, Congress passed the McCarran-Ferguson Act, giving the insurance industry almost complete immunity from Federal antitrust laws. The Act acknowledges the significant role States have in the regulation of the business of insurance, and implements this policy by preempting Federal antitrust laws which would intrude upon State authority in the area.

Industry specific statutory exemptions from antitrust laws are rare, and when they are enacted, it is important that we periodically revisit them to ensure that the benefits of the exemption are not outweighed by the potential harms that could be imposed on consumers from the loss of competition. The McCarran-Ferguson Act is no exception and, for good reason, has recently been revisited by the Senate Judiciary Committee.

At a recent hearing before the Committee, it became abundantly clear that the McCarran-Ferguson Act is no

longer a justified or practical law; it is overly complex and stifles competition. Recognizing that the insurance industry has unique characteristics, including the dependence on collective claim and loss data, Senator Specter and I drafted a bill to accommodate those legitimate needs while still providing Federal regulators with the tools to investigate and prevent collusion and other anticompetitive behaviors. More specifically, our bill authorizes Federal enforcement agencies to police violations of antitrust laws, without weakening the States' comprehensive regulatory power.

American consumers, from sophisticated multi-national businesses to Vermonters shopping for personal insurance, have the right to be confident that the cost of their insurance reflects competitive market conditions and not collusive behavior. Yet, when consumers are continually faced with higher prices, fewer options, and declining quality of service from their insurance providers, there are no such assurances.

There is little disagreement that consumers are increasingly frustrated with the cost and quality of their insurance policies. This bill is an important step towards restoring integrity in our insurance markets. I hope it will act as a catalyst for action to ensure market forces are at work in the insurance industry.

Mr. President, today I am pleased to introduce the Public Research in the Public Interest Act of 2006. If enacted, this bill will save lives and improve the quality of health for millions of families living in impoverished nations. Recently, I have introduced and cosponsored six bills to address the increasingly important issues that relate to global health and the need for earlier access to generic medicines in the United States.

Each year, millions of people needlessly suffer from disease in impoverished countries worldwide because they lack access to lifesaving medicines. And each year, America's world-renowned research universities develop innovative treatments to combat these diseases. However, under our current system, these treatments do not get to the families in impoverished nations who so desperately need them.

Today, 15 percent of the world's people consume about 91 percent of the world's pharmaceuticals. The high price of lifesaving medicines-- medicines we take for granted--puts them far beyond the reach of millions of the most vulnerable populations.

While the concept of my bill is simple, the implications are profound. If passed, my bill would greatly lessen the cost burden of generic drugs in the developing world. It would achieve this by requiring federally funded research institutions to permit their inventions, such as, drugs, vaccines, and innovative medical devices, to be provided inexpensively by generic companies distributing medical supplies to the developing world.

Federally funded labs and research institutions have a vital role to play in meeting this goal. For example, Yale University has an agreement with Doctors Without Borders to permit their generic version of its lifesaving AIDS drug to be used for a pilot treatment program in South Africa. To date, Yale's humanitarian endeavor, which in no way reduced their licensing revenues, continues to save thousands of lives.

It is time to ensure that public funds truly serve public purposes-- in this instance, delivering essential health care needs at minimal costs to American taxpayers, universities, and pharmaceutical companies. Unfortunately, this Congress has been tied up in knots recently and has been unable to pass even critical appropriations bills. The measures before us are crucial. This comprehensive approach toward providing better global health aid and better access to generic drugs should become law, and I am committed to trying to make it so. I look forward to working with my colleagues on both sides of the aisle, in this Congress or the next, to enact this important legislation.

I have recently introduced or sponsored six bills to address the need for better access to low-cost generic medicines. Two of these bills relate to global health, and four of them address the need for earlier access to generic medicines in the United States.

Federally funded laboratories and other research institutions have a critical role to play in delivering affordable medicines to those sick and suffering worldwide. In 2000, a Senate Joint Economic Committee Report found that public research was instrumental in developing 15 of the 21 drugs considered by experts to have had the highest therapeutic impact on society.

Between 1970 and 2001, there was a ten-fold increase in the number of U.S. patents issued annually to U.S. academic institutions. American universities, hospitals, and other nonprofit research centers concluded that more than 4,500 license and option agreements were executed in 2003, more than double the license and option agreements executed in 1993. A major share of these patents is in the biomedical field.

The World Health Organization's 2006 Commission on Intellectual Property Rights, Innovation, and Public Health has also recently recognized the crucial role of universities. The WHO recommended that universities adopt licensing practices designed to increase access to medicines in developing countries.

The report also tells the story of one way in which the crucial role of university innovations and other publicly funded research in promoting global public health first came into the public eye. It is an interesting story.

In 2001, the international organization Medecins Sans Frontieres, or MSF, requested Yale University's permission to use its generic life- saving AIDS drug, stavudine, for a pilot treatment project outside Cape Town.

This was at a time when HIV drugs were first being introduced in the developing world. The costs were prohibitive. Scientists at Yale University had discovered stavudine's value in the fight against AIDS, and Yale University was the key patent holder.

In response to MSF's request, Yale and Bristol-Myers Squibb jointly announced that they would permit the sale of generics in South Africa and that Bristol-Myers Squibb would lower the price of its brand-name stavudine by 96 percent throughout sub-Saharan Africa.

The Yale/Bristol-Myers Squibb announcement was highly significant in the campaign for access to affordable first-line AIDS treatments. Yale and Bristol-Myers Squibb's humanitarian action did not reduce licensing revenues with respect to Yale. Meanwhile, Yale's invention to this day continues to save thousands of lives. According to a recent report by the WHO's AIDS Medicines and Diagnostics Service, stavudine is one of the three first-line HIV medicines that together constituted almost 90 percent of total procurement in 2005.

Unfortunately, this has been an isolated success story rather than the road to greater access for the many important inventions that come out of publicly funded research institutions.

With respect to HIV/AIDS treatment alone, at least two major drugs based on university inventions have come to market since the 2001 stavudine announcement: emtricitabine, developed in large part at Emory University and sold by Gilead Sciences as Emtriva; and T-20 developed in large part at Duke University and marketed as Fuzeon by Hoffmann-La Roche and Trimeris. Just this summer, Yale University announced the license of a new candidate for an AIDS drug based on stavudine. Called ``4'-ethynyl-stavudine'', (or abbreviated more simply as Ed4T). Early testing suggests that it may be both more effective and less toxic than its famous predecessor.

But the question is: Will these lifesaving drugs ultimately be available in places like sub-Saharan Africa, where HIV infection rates range as high as a third of the adult population?

This bill, the Public Research in the Public Interest Act of 2006, would focus on this problem. By allowing licensing by generic companies of inventions coming out of publicly funded research institutions--and other associated inventions required to produce marketable medicines-- it would drive down the price of new, innovative drugs in areas where they would otherwise be effectively unavailable.

Because the licensing regime this bill proposes is self-enforcing, it minimizes both administrative overhead and eliminates the need for case-by-case decisions, while preserving important intellectual property protections. Because the Act allows the introduction of generic or reduced-price drugs only into markets too poor to otherwise afford them, its terms do not threaten corporate investments or profits in wealthy nations. All generic drugs manufactured under the bill must be clearly differentiated from the versions sold in developed nations, where the brand-name companies make their profits.

Moreover, publicly funded research institutions would receive royalties from the sale of inventions covered by this bill in developing markets. While the initial payment of the royalties will typically go to the research institution itself, the bill leaves complete freedom to these institutions and their licensee to decide how such royalties will ultimately be shared. This freedom is especially important because the inventions from universities and other research institutions often form only one part of the collection of intellectual property necessary to manufacture a finished, marketable drug. The appropriate division of the royalties paid by generics for this package of rights in the developing world will be different for different drugs and medical devices, depending on whether the university's contribution is more or less central to the finished product. This Act would allow all the various parties the flexibility to divide these royalties appropriately.

I should be clear, however, that the bill I introduce today is an initial proposal. I look forward to working with research universities in the United States on this important matter. I also intend to work with the companies involved in creating, licensing, and bringing to market the fruits of America's unparalleled research institutions as we continue to shape this solution.

Indeed, the best answer may not be legislative at all, if the groups involved can come together around a different approach. But however it is achieved, I believe that increasing the availability of the many medical inventions that come from publicly funded research centers is a good solution to pressing global health concerns.

Universities, in particular, are unique institutions with unique public commitments. They are, before anything else, institutions dedicated to the creation and dissemination of knowledge in the public interest. The Public Research in the Public Interest Act of 2006 is designed in the spirit of that commitment.

This bill completes a package of six bills that I have recently introduced to increase access to medicines in the United States and to address the global public health crisis. While it is the magnitude of this problem that demands that we, as a Nation, take action, it is the small things, the individual stories that often speak to us most clearly at a personal level.

In my office hangs a photograph I took of three young boys on the side of a mountain in Turkey. I found them flying a kite off the edge of a cliff that overlooks a vast slum. They had made the toy out of scraps of paper, patched together with tape and string, and were flying it on the currents rushing up the face of the rock.

I recalled fearing for their safety as they played so precariously close to the edge. But these children faced much greater risks. When my grandchildren get sick, we can always be sure they will get the medicines they need. For these boys, there is no such guarantee.

These boys, and the millions of children and others like them around the world are the reason behind each of the six bills I have introduced.

Earlier this summer, I introduced a bill which can be the catalyst for empowering U.S. generic companies to save the lives or improve the health of millions of families in impoverished nations. Under the ``Life-Saving Medicines Export Act,'' U.S. companies can make low-cost generic versions of any medicine for export to impoverished nations that face public health crises when those impoverished nations cannot produce those life-saving medicines for themselves.

This bill is based on World Trade Organization agreements permitting nations with pharmaceutical industries to help nations in need. The World Health Assembly and the World Health Organization have adopted resolutions urging all WTO member nations with a generic capability to adopt laws that

implement that agreement. On December 6, 2005, the Office of the U.S. Trade Representative announced that it ``welcomes'' efforts to ``allow countries to override patent rights when necessary to export lifesaving drugs to developing countries that face public health crises but cannot produce drugs for themselves.''

This bill addresses the urgent needs of millions of low-income families in impoverished nations while protecting the interests of the patent owners of these life-saving medicines. As in the Public Research in the Public Interest Act, introduced today, generic companies are only permitted to use the compulsory license in the bill in developing nations, where low-income families are simply too poor to purchase the ``brand-name'' versions, and the generic versions must be clearly marked as not for resale in developed nations. Thus, both bills pose the risk of minimal losses for patent holders while generating new revenue for the brand-name companies from the royalties on generic sales.

The four additional bills that complete this ``Access to Medicines'' package seek to preserve incentives for U.S. generic companies to enter and compete in the market. Increased competition leads to lower prices and saved lives.

First, in the wake of the Supreme Court refusal to hear the drug patent case called Federal Trade Commission (FTC) v. Schering-Plough, I joined fellow Judiciary Committee members--Senators Kohl, Grassley and Schumer--in introducing legislation to explicitly prohibit brand-name drug manufacturers from using pay-off agreements to keep cheaper generic equivalents off the market. Such payments are a distortion in the market that harms patients. I was stunned that the U.S. Supreme Court refused to hear a case so important to our senior citizens. The Federal Trade Commission asked the Supreme Court to hear the arguments but the Court refused at the request of the Justice Department. It seems there may be no justice--until that bill is passed--for our seniors needing costly patented medicines but live where the brand-name company has paid generic companies not to compete.

Then, in July, I joined Senators Rockefeller and Schumer in introducing legislation to ban ``authorized generics'' that can stifle true generic competition. I said at the time that ``the giant drug companies keep coming up with ways to avoid real competition and consumers need to be able to count on Congress to close each new anticompetitive loophole they come up with.'' If enacted, that bill will close this anti-competitive loophole in the Hatch-Waxman Act and will preserve the incentives Congress created for generic companies to enter the market to supply American citizens and seniors with lower- cost drugs.

The fifth bill introduced was with Senator Kohl. That bill is intended to stop frivolous Citizen Petitions designed to delay introduction of generic drugs into the market place. Recently, large pharmaceutical companies have exploited that petition process to keep their profits high. In addition, I joined with Senators Schumer, Clinton and Stabenow on the Access to LifeSavings Medicine Act which related to developing a fast-track process for approving generic versions of biologic medicines.

I want to thank Stacy Kern-Scheerer with Senate Legislative Counsel who provided very helpful guidance under extreme pressure in drafting this short, but complex bill. She and Bill Baird, also with Senate Legislative Counsel, did a great job with a rapid turnaround.

I believe that these six bills, together, can save millions of lives. Recognizing the great need, there have been significant voluntary efforts made by brand-name pharmaceutical companies, foundations, and nonprofits who have already donated life-saving medicines, time, personnel and money to help in the fight against deadly diseases both in America and abroad. I commend and greatly appreciate those efforts. Nonetheless, much remains to be done. My bills will both add to and complement existing efforts, by making sure even cutting edge treatments are available in developing countries, and by ensuring that America's aid dollars and the contributions of private philanthropists are used as efficiently as they can possibly be used.

The President's Emergency Plan for AIDS Relief Report to Congress reported that ``[i]n every case generics prices present an opportunity for cost savings; in some cases, the branded price per pack of a drug is up to 11 times the cost of the approved generic version.''

The current global public health crisis is one of the great callings of our time. As a nation, we cannot afford to ignore this threat. Our own health and aspects of our national security depend on it.

We have become far more aware today of how much our own health depends on what takes place half a world away. Whether it is AIDS, SARS, West Nile Virus, the Avian Flu, or the encroaching menace of multi-drug resistant bacteria, we are all at risk. We are only an airplane flight away from wherever an outbreak may occur--a place where the medical innovations developed in this country to combat these devastating diseases may not be available to keep the outbreak under control.

In a post-9/11 world, our well-being is intimately connected with that of other nations. Health is an essential building block for a strong economy, and vital to maintain a thriving democracy. Through increasing access to essential medicines throughout the world, the United States can help to give developing nations a chance to flourish, while improving U.S. relations with large segments of the world's population.

President Franklin Roosevelt once said: ``The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough, for those who have little.''

We are fortunate, at some times and on some issues, to be able to do both. Now is one of those times, and this is one of those issues. I hope my colleagues will join me in supporting my efforts this year on the global public health crisis, including today's addition, the Public Research in the Public Interest Act of 2006.

Mr. President, today I am pleased to introduce the Public Research in the Public Interest Act of 2006. If enacted, this bill will save lives and improve the quality of health for millions of families living in impoverished nations. Recently, I have introduced and cosponsored six bills to address the increasingly important issues that relate to global health and the need for earlier access to generic medicines in the United States.

Each year, millions of people needlessly suffer from disease in impoverished countries worldwide because they lack access to lifesaving medicines. And each year, America's world-renowned research universities develop innovative treatments to combat these diseases. However, under our current system, these treatments do not get to the families in impoverished nations who so desperately need them.

Today, 15 percent of the world's people consume about 91 percent of the world's pharmaceuticals. The high price of lifesaving medicines-- medicines we take for granted--puts them far beyond the reach of millions of the most vulnerable populations.

While the concept of my bill is simple, the implications are profound. If passed, my bill would greatly lessen the cost burden of generic drugs in the developing world. It would achieve this by requiring federally funded research institutions to permit their inventions, such as, drugs, vaccines, and innovative medical devices, to be provided inexpensively by generic companies distributing medical supplies to the developing world.

Federally funded labs and research institutions have a vital role to play in meeting this goal. For example, Yale University has an agreement with Doctors Without Borders to permit their generic version of its lifesaving AIDS drug to be used for a pilot treatment program in South Africa. To date, Yale's humanitarian endeavor, which in no way reduced their licensing revenues, continues to save thousands of lives.

It is time to ensure that public funds truly serve public purposes-- in this instance, delivering essential health care needs at minimal costs to American taxpayers, universities, and pharmaceutical companies. Unfortunately, this Congress has been tied up in knots recently and has been unable to pass even critical appropriations bills. The measures before us are crucial. This comprehensive approach toward providing better global health aid and better access to generic drugs should become law, and I am committed to trying to make it so. I look forward to working with my colleagues on both sides of the aisle, in this Congress or the next, to enact this important legislation.

I have recently introduced or sponsored six bills to address the need for better access to low-cost generic medicines. Two of these bills relate to global health, and four of them address the need for earlier access to generic medicines in the United States.

Federally funded laboratories and other research institutions have a critical role to play in delivering affordable medicines to those sick and suffering worldwide. In 2000, a Senate Joint Economic Committee Report found that public research was instrumental in developing 15 of the 21 drugs considered by experts to have had the highest therapeutic impact on society.

Between 1970 and 2001, there was a ten-fold increase in the number of U.S. patents issued annually to U.S. academic institutions. American universities, hospitals, and other nonprofit research centers concluded that more than 4,500 license and option agreements were executed in 2003, more than double the license and option agreements executed in 1993. A major share of these patents is in the biomedical field.

The World Health Organization's 2006 Commission on Intellectual Property Rights, Innovation, and Public Health has also recently recognized the crucial role of universities. The WHO recommended that universities adopt licensing practices designed to increase access to medicines in developing countries.

The report also tells the story of one way in which the crucial role of university innovations and other publicly funded research in promoting global public health first came into the public eye. It is an interesting story.

In 2001, the international organization Medecins Sans Frontieres, or MSF, requested Yale University's permission to use its generic life- saving AIDS drug, stavudine, for a pilot treatment project outside Cape Town.

This was at a time when HIV drugs were first being introduced in the developing world. The costs were prohibitive. Scientists at Yale University had discovered stavudine's value in the fight against AIDS, and Yale University was the key patent holder.

In response to MSF's request, Yale and Bristol-Myers Squibb jointly announced that they would permit the sale of generics in South Africa and that Bristol-Myers Squibb would lower the price of its brand-name stavudine by 96 percent throughout sub-Saharan Africa.

The Yale/Bristol-Myers Squibb announcement was highly significant in the campaign for access to affordable first-line AIDS treatments. Yale and Bristol-Myers Squibb's humanitarian action did not reduce licensing revenues with respect to Yale. Meanwhile, Yale's invention to this day continues to save thousands of lives. According to a recent report by the WHO's AIDS Medicines and Diagnostics Service, stavudine is one of the three first-line HIV medicines that together constituted almost 90 percent of total procurement in 2005.

Unfortunately, this has been an isolated success story rather than the road to greater access for the many important inventions that come out of publicly funded research institutions.

With respect to HIV/AIDS treatment alone, at least two major drugs based on university inventions have come to market since the 2001 stavudine announcement: emtricitabine, developed in large part at Emory University and sold by Gilead Sciences as Emtriva; and T-20 developed in large part at Duke University and marketed as Fuzeon by Hoffmann-La Roche and Trimeris. Just this summer, Yale University announced the license of a new candidate for an AIDS drug based on stavudine. Called ``4'-ethynyl-stavudine'', (or abbreviated more simply as Ed4T). Early testing suggests that it may be both more effective and less toxic than its famous predecessor.

But the question is: Will these lifesaving drugs ultimately be available in places like sub-Saharan Africa, where HIV infection rates range as high as a third of the adult population?

This bill, the Public Research in the Public Interest Act of 2006, would focus on this problem. By allowing licensing by generic companies of inventions coming out of publicly funded research institutions--and other associated inventions required to produce marketable medicines-- it would drive down the price of new, innovative drugs in areas where they would otherwise be effectively unavailable.

Because the licensing regime this bill proposes is self-enforcing, it minimizes both administrative overhead and eliminates the need for case-by-case decisions, while preserving important intellectual property protections. Because the Act allows the introduction of generic or reduced-price drugs only into markets too poor to otherwise afford them, its terms do not threaten corporate investments or profits in wealthy nations. All generic drugs manufactured under the bill must be clearly differentiated from the versions sold in developed nations, where the brand-name companies make their profits.

Moreover, publicly funded research institutions would receive royalties from the sale of inventions covered by this bill in developing markets. While the initial payment of the royalties will typically go to the research institution itself, the bill leaves complete freedom to these institutions and their licensee to decide how such royalties will ultimately be shared. This freedom is especially important because the inventions from universities and other research institutions often form only one part of the collection of intellectual property necessary to manufacture a finished, marketable drug. The appropriate division of the royalties paid by generics for this package of rights in the developing world will be different for different drugs and medical devices, depending on whether the university's contribution is more or less central to the finished product. This Act would allow all the various parties the flexibility to divide these royalties appropriately.

I should be clear, however, that the bill I introduce today is an initial proposal. I look forward to working with research universities in the United States on this important matter. I also intend to work with the companies involved in creating, licensing, and bringing to market the fruits of America's unparalleled research institutions as we continue to shape this solution.

Indeed, the best answer may not be legislative at all, if the groups involved can come together around a different approach. But however it is achieved, I believe that increasing the availability of the many medical inventions that come from publicly funded research centers is a good solution to pressing global health concerns.

Universities, in particular, are unique institutions with unique public commitments. They are, before anything else, institutions dedicated to the creation and dissemination of knowledge in the public interest. The Public Research in the Public Interest Act of 2006 is designed in the spirit of that commitment.

This bill completes a package of six bills that I have recently introduced to increase access to medicines in the United States and to address the global public health crisis. While it is the magnitude of this problem that demands that we, as a Nation, take action, it is the small things, the individual stories that often speak to us most clearly at a personal level.

In my office hangs a photograph I took of three young boys on the side of a mountain in Turkey. I found them flying a kite off the edge of a cliff that overlooks a vast slum. They had made the toy out of scraps of paper, patched together with tape and string, and were flying it on the currents rushing up the face of the rock.

I recalled fearing for their safety as they played so precariously close to the edge. But these children faced much greater risks. When my grandchildren get sick, we can always be sure they will get the medicines they need. For these boys, there is no such guarantee.

These boys, and the millions of children and others like them around the world are the reason behind each of the six bills I have introduced.

Earlier this summer, I introduced a bill which can be the catalyst for empowering U.S. generic companies to save the lives or improve the health of millions of families in impoverished nations. Under the ``Life-Saving Medicines Export Act,'' U.S. companies can make low-cost generic versions of any medicine for export to impoverished nations that face public health crises when those impoverished nations cannot produce those life-saving medicines for themselves.

This bill is based on World Trade Organization agreements permitting nations with pharmaceutical industries to help nations in need. The World Health Assembly and the World Health Organization have adopted resolutions urging all WTO member nations with a generic capability to adopt laws that

implement that agreement. On December 6, 2005, the Office of the U.S. Trade Representative announced that it ``welcomes'' efforts to ``allow countries to override patent rights when necessary to export lifesaving drugs to developing countries that face public health crises but cannot produce drugs for themselves.''

This bill addresses the urgent needs of millions of low-income families in impoverished nations while protecting the interests of the patent owners of these life-saving medicines. As in the Public Research in the Public Interest Act, introduced today, generic companies are only permitted to use the compulsory license in the bill in developing nations, where low-income families are simply too poor to purchase the ``brand-name'' versions, and the generic versions must be clearly marked as not for resale in developed nations. Thus, both bills pose the risk of minimal losses for patent holders while generating new revenue for the brand-name companies from the royalties on generic sales.

The four additional bills that complete this ``Access to Medicines'' package seek to preserve incentives for U.S. generic companies to enter and compete in the market. Increased competition leads to lower prices and saved lives.

First, in the wake of the Supreme Court refusal to hear the drug patent case called Federal Trade Commission (FTC) v. Schering-Plough, I joined fellow Judiciary Committee members--Senators Kohl, Grassley and Schumer--in introducing legislation to explicitly prohibit brand-name drug manufacturers from using pay-off agreements to keep cheaper generic equivalents off the market. Such payments are a distortion in the market that harms patients. I was stunned that the U.S. Supreme Court refused to hear a case so important to our senior citizens. The Federal Trade Commission asked the Supreme Court to hear the arguments but the Court refused at the request of the Justice Department. It seems there may be no justice--until that bill is passed--for our seniors needing costly patented medicines but live where the brand-name company has paid generic companies not to compete.

Then, in July, I joined Senators Rockefeller and Schumer in introducing legislation to ban ``authorized generics'' that can stifle true generic competition. I said at the time that ``the giant drug companies keep coming up with ways to avoid real competition and consumers need to be able to count on Congress to close each new anticompetitive loophole they come up with.'' If enacted, that bill will close this anti-competitive loophole in the Hatch-Waxman Act and will preserve the incentives Congress created for generic companies to enter the market to supply American citizens and seniors with lower- cost drugs.

The fifth bill introduced was with Senator Kohl. That bill is intended to stop frivolous Citizen Petitions designed to delay introduction of generic drugs into the market place. Recently, large pharmaceutical companies have exploited that petition process to keep their profits high. In addition, I joined with Senators Schumer, Clinton and Stabenow on the Access to LifeSavings Medicine Act which related to developing a fast-track process for approving generic versions of biologic medicines.

I want to thank Stacy Kern-Scheerer with Senate Legislative Counsel who provided very helpful guidance under extreme pressure in drafting this short, but complex bill. She and Bill Baird, also with Senate Legislative Counsel, did a great job with a rapid turnaround.

I believe that these six bills, together, can save millions of lives. Recognizing the great need, there have been significant voluntary efforts made by brand-name pharmaceutical companies, foundations, and nonprofits who have already donated life-saving medicines, time, personnel and money to help in the fight against deadly diseases both in America and abroad. I commend and greatly appreciate those efforts. Nonetheless, much remains to be done. My bills will both add to and complement existing efforts, by making sure even cutting edge treatments are available in developing countries, and by ensuring that America's aid dollars and the contributions of private philanthropists are used as efficiently as they can possibly be used.

The President's Emergency Plan for AIDS Relief Report to Congress reported that ``[i]n every case generics prices present an opportunity for cost savings; in some cases, the branded price per pack of a drug is up to 11 times the cost of the approved generic version.''

The current global public health crisis is one of the great callings of our time. As a nation, we cannot afford to ignore this threat. Our own health and aspects of our national security depend on it.

We have become far more aware today of how much our own health depends on what takes place half a world away. Whether it is AIDS, SARS, West Nile Virus, the Avian Flu, or the encroaching menace of multi-drug resistant bacteria, we are all at risk. We are only an airplane flight away from wherever an outbreak may occur--a place where the medical innovations developed in this country to combat these devastating diseases may not be available to keep the outbreak under control.

In a post-9/11 world, our well-being is intimately connected with that of other nations. Health is an essential building block for a strong economy, and vital to maintain a thriving democracy. Through increasing access to essential medicines throughout the world, the United States can help to give developing nations a chance to flourish, while improving U.S. relations with large segments of the world's population.

President Franklin Roosevelt once said: ``The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough, for those who have little.''

We are fortunate, at some times and on some issues, to be able to do both. Now is one of those times, and this is one of those issues. I hope my colleagues will join me in supporting my efforts this year on the global public health crisis, including today's addition, the Public Research in the Public Interest Act of 2006.

Mr. President, I have sought recognition today to introduce with Senator Santorum the Hospital Payment Improvement and Equity Act, which will provide an increased reimbursement for acute care hospitals and inpatient rehabilitation facilities that are disadvantaged by Medicare payments under the Medicare area wage index reclassification system.

For a considerable period of time, there have been a number of counties in Pennsylvania that have been suffering from low Medicare reimbursements, which has caused them great disadvantage because their nurses, and other medical personnel are moving to surrounding areas. I refer specifically to Luzerne County, Lackawanna County, Wyoming County, Lycoming County, and Columbia County in northeastern Pennsylvania. Those counties are surrounded by MSAs, metropolitan statistical areas, in Newport, NY, to the north; in Allentown to the southeast; and the Harrisburg MSA to the southwest. As these counties are surrounded by MSAs with higher Medicare reimbursements, a flight of very necessary medical personnel has occurred. More recently, western Pennsylvania has been faced with Medicare reimbursement that has not kept pace with the rising cost of healthcare placing a tremendous burden on these facilities to provide good jobs at competitive wages.

It has also come to my attention that inpatient rehabilitation facilities are not provided an opportunity to obtain equitable Medicare reimbursement. Inpatient rehabilitation facilities receive adjustments in their Medicare reimbursement due to geographic disadvantages within the Medicare inpatient prospective payment system. This is based on information gathered from other acute care facilities in the MSA, not from their own wage information. Inpatient Rehabilitation Facilities, further, cannot apply for reclassification to another MSA that reflects their labor costs. This has prevented those facilities from being eligible for increased funding to assist with wages like acute care facilities, while being forced to compete for employees with those facilities that have had access to increased funding.

I have worked to find a solution to this problem for a number of years. During the conference for the fiscal year 2002 Labor, Health and Human Services, and Education Appropriations bill, the conferees agreed that there should be relief for these areas in Pennsylvania that were surrounded by areas that had higher MSA ratings. However, at the last minute, there was an objection to including language in the conference report.

To correct this problem I, with Representatives Sherwood and English, brought the matter forward in the Fiscal Year 2002 Supplemental Appropriations bill. They worked to include language in the House version of the bill and I filed an amendment to the Senate bill. During conference negotiations my amendment was defeated and the provisions were not included.

As part the Fiscal Year 2004 Labor, Health and Human Services, and Education Appropriations, I provided $7 million for hospitals in Northeast Pennsylvania that continued to be disadvantaged by the Medicare area wage index reclassification. This was provided as temporary assistance for those facilities.

During the consideration of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, I met with Finance Chairman Grassley and Ranking Member Baucus about the bill provisions, including the need for a solution to the Medicare area wage index reclassification problem in Pennsylvania. As a result, Section 508 was included in the bill, which provides increased funding for hospitals nationally to be reclassified to locations with higher Medicare reimbursement rates for three years at $300 million per year. The temporary program, which began in April 2004 and will expire April 2007, has and will provide Pennsylvania hospitals $69 million over that time, $23 million per year.

Most recently, as part of the Senate Fiscal Year 2007 Labor, Health and Human Services, and Education Appropriations bill, I provided $4.3 million for hospitals in the Scranton/Wilkes-Barre and Williamsport areas that have been harmed by the ongoing wage index problem. Further, on June 14, 2006, 20 other Senators joined me in sending a letter to Finance Chairman Grassley and Ranking Member Baucus in support of Senate action to extend Section 508.

As the Section 508 program is scheduled to expire on March 31, 2007, and the low Medicare area wage index reimbursement is still being unfairly placed on many Pennsylvania hospitals, the legislation I am introducing would extend the current Section 508 benefit to those who are currently receiving funding and to those who deserved funds under the previous competition for this funding.

The legislation builds on the Section 508 Medicare Prescription Drug, Improvement, and Modernization Act of 2003, by providing hospitals who continue to be disadvantaged by low Medicare reimbursement an increase in funding. The bill would allow both acute care hospitals and not-for- profit inpatient rehabilitation facilities apply for funding in a similar manner as set up under Section 508. Facilities that meet specific wage and geographic criteria will receive a three year reclassification.

Under the Section 508, program a number of hospitals meet the necessary criteria to receive reclassification, however, inadequate funding of $300 million per year for the program was provided. As a result, 154 additional hospitals did not receive this vital funding. Under this legislation, sufficient funds would be provided to allow all facilities that meet wage and geographic criteria to receive reclassification funding.

To remedy the under-funding of impatient rehabilitation facilities, not for profit facilities will be eligible for funding through this program. If all acute care hospitals in an MSA apply for and receive funding through this program, or have sole community hospital status, or have reclassified to another MSA through another mechanism, then non-profit inpatient rehabilitation facilities in that MSA are eligible. Those rehabilitation facilities will be reclassified to the MSA where a majority of other hospitals from the same MSA have been reclassified.

For those hospitals who received funding under the current Section 508; they will have received the benefit of a higher wage index for three years, April 1 , 2004-March 1, 2007. These higher wages will be included in the hospitals' cost reports and be reflected in the data used to calculate a future wage index. It has always been the hope that this increased funding would enable these hospitals to pay higher wages and subsequently see an increase in the area wage index.

The problem with the wage index system is the use of three year-old audited cost report data for the calculation of the wage index. Therefore, a full year of Section 508 money from fiscal year 2004 will first be seen in the fiscal year 2008 wage index calculation. For hospitals that end their fiscal year on June 30, that wage data will not be included in their wage index calculation until fiscal year 2009. To reclassify, three years of data is needed to show the proper evidence for eligibility. Thus, the full effect of the Section 508 funding will flow through the wage index system by fiscal year 2011. For this reason, additional funding is needed for the next three years in order for these disadvantaged hospitals to continue paying competitive salaries to their employees.

Under Section 508, 121 hospitals have and will receive $900 million in assistance, while this is a significant amount of funding, it did not fix the problem of low Medicare wage reimbursement. A long term solution to this problem is needed, however the current Section 508 funding will expire on March 31, 2007 and additional funding is needed for these facilities while we work to find that solution. The loss of hospitals and jobs due to unfair CMS reimbursement is unacceptable.

The hospitals which face this low Medicare reimbursement are in great financial distress. These are hospitals which are serving an aging population

in northeastern Pennsylvania and across the nation. This legislation provides Medicare reimbursement assistance for those facilities and ensures Medicare beneficiaries' access to care. I encourage my colleagues to work with Senator Santorum and me to move this legislation forward promptly.

Mr. President, I seek recognition today to introduce the Insurance Industry Antitrust Enforcement Act of 2006. This legislation would subject the insurance industry to the antitrust laws, which apply to almost every other industry in America.

Congress enacted the McCarran-Ferguson Act in 1945. It did so in response to a controversial Supreme Court case in which the Court held that the business of insurance constituted interstate commerce. The ruling opened the door to federal regulation of insurance, a business that had historically been regulated by the States. Reacting to concern from the states that they would no longer have authority to collect taxes on insurance premiums, Congress passed McCarran-Ferguson, which reaffirmed the power of the States to regulate insurance and collect taxes.

In doing so, Congress exempted insurance industry practices from the antitrust laws to the extent that such practices are ``regulated by state law.'' Since then, the courts have liberally interpreted the phrase ``regulated by state law.'' They have held that insurance industry practices are exempt from the antitrust laws so long as regulators have been given jurisdiction over the challenged practices-- regardless of whether the regulators ever exercise that jurisdiction.

Over the years, State regulators have either chosen not to regulate, or failed to regulate, practices that would have violated the antitrust laws absent McCarran-Ferguson. With McCarran-Ferguson, such practices escape both regulatory and federal antitrust oversight. The most notorious practices to come to light involved bid-rigging and customer allocation by insurance broker, Marsh & McClennan, and several of the nation's largest insurers, including AIG and Zurich American Insurance Company. Under the scheme, Marsh steered unsuspecting clients to insurers with which it had lucrative payoff agreements. To make the scheme work, Marsh solicited fictitious bids from other complicit insurers to make the bid submitted by the selected insurer--the one that offered Marsh the highest payoff--seem competitive.

Even though the scheme eliminated competition among the insurance companies that were involved, those companies could not be prosecuted under Federal antitrust law. Several States prosecuted the insurance companies

under a variety of State laws, including antitrust laws, but federal prosecutors could not bring their significant resources to bear. There simply is no justification for that. Federal law enforcement should have the power to prosecute such blatant violations of the antitrust laws.

This is not the first attempt to subject the insurance industry to Federal antitrust law. In the wake of numerous insolvencies, mismanagement and other misconduct by insurers in the late 1980s, legislation was introduced repealing the exemption. That legislation, introduced by Congressman Brooks, faced opposition from insurers who claimed that many industry practices engaged in jointly by insurance companies were pro-competitive and necessary for smaller insurers. The legislation provided a safe harbor, specifically listing the practices of insurance companies that would be exempt from the antitrust laws. However, it proved impossible to craft a list of safe harbors for all the information that competing insurers claimed they needed to share with one another. This bill has avoided that problem.

More recently, some have argued that the answer to insurance industry ills is full federal regulation. I do not necessarily believe that stripping the States of their authority to regulate the insurance industry is the answer. This bill does not do that. It allows states to continue to regulate their insurance industries. However, the existence of state regulation is no reason to prevent the Federal Government from prosecuting violators of antitrust laws. And, there is no reason to prevent Federal prosecutors from going after those violators just because they happen to work for insurance companies.

As I've said, allowing Federal prosecutors to go after those who violate the antitrust laws will not prevent states from regulating the insurance industry. If a state is actively supervising practices by its insurance industry that might otherwise violate the antitrust laws, this legislation would exempt that practice from the antitrust laws. Antitrust law does not generally apply where a state is actively regulating an industry. This is as it should be and the legislation I introduce today, the Insurance Industry Antitrust Act of 2006, incorporates that standard.

The Judiciary Committee held a hearing on this issue in May.

During the hearing, Marc Racicot, the President of the American Insurance Association, a trade association composed of the nation's largest insurers, acknowledged that ``every State provides some form of antitrust regulation of insurers.'' In other words, many States already enforce their State antitrust laws with respect to insurers. So, I have to ask, why have we tied the hands of federal antitrust enforcers?

The insurers will argue that repealing the antitrust exemption for insurers will create uncertainty by throwing into question the legality of every joint practice engaged in by insurers. They will argue that the legality of each joint practice will have to be litigated in court. However, this bill has been drafted to avoid such litigation. Rather than incorporating a laundry list of safe harbors, an approach that was taken in the past, the bill would allow the Federal Trade Commission to issue guidelines identifying joint practices that do not raise antitrust concerns and would therefore not face scrutiny from antitrust enforcers.

This is a job for which the Commission is well equipped. In the past, the Commission along with the Justice Department issued ``Statements of Antitrust Enforcement Policy in Health Care.'' The Health Care Statements identified joint conduct by health care providers that did not raise antitrust concerns and therefore would likely escape scrutiny by antitrust enforcers. The Health Care Statements were designed to give health care providers certainty about the legality of their joint conduct under the antitrust laws. Similar guidelines for the insurance industry would provide insurers with certainty, but at the same time, would ensure that joint practices that are anticompetitive receive scrutiny from the antitrust enforcement agencies.

Although insurers oppose repeal of their antitrust exemption, others support a repeal. In particular, the Antitrust Section of the American Bar Association has long supported repeal. During the Judiciary Committee's hearing, the current head of the Antitrust Section, Donald Klawiter noted the Section's nearly 20-year history of supporting repeal. Klawiter testified that ``the benefits of antitrust exemptions almost never outweigh the potential harm imposed on society by the loss of competition.'' At the same hearing, Robert Hunter, testifying on behalf of the Consumer Federation of America, concluded that ``application of the antitrust laws to the insurance industry could result in double-digit savings for America's insurance consumers.''

It is my hope that this legislation will bring the benefits of competition to the insurance industry and to consumers. Too many consumers are paying too much for insurance due to the collusive atmosphere that exists in the insurance industry. This has become a particular problem along the Gulf Coast, where insurers have shared hurricane loss projections, which may result in double-digit premium increases for Gulf Coast homeowners.

I strongly urge members who are concerned about industry exemption from the antitrust laws and collusive insurance industry practices to support this important piece of legislation. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce legislation designed to make the tax laws more fair for America's primary and secondary school teachers.

Our public school teachers are some of the unheralded heroes of our society.

These women and men dedicate their careers to educating the young people of America.

School teachers labor in often difficult and even dangerous circumstances. In most places, including in my home State of Utah, the salary of the average public school teacher is significantly below the national average.

A historic turnover is taking place in the teaching profession. While student enrollments are rising rapidly, more than a million veteran teachers are nearing retirement.

Experts predict that overall we will need more than two million new teachers in the next decade.

This teacher recruitment problem has reached crisis proportions in some urban and rural areas. The shortage is most acute in high-need subject areas such as math, science, and technology.

Retaining qualified teachers in the schools is only part of the puzzle. Attracting new teachers in math, science, and technology is another. It is clear that our teacher recruitment problem represents one the biggest challenges America faces as we contemplate how we are going to prepare the next generation to take their places in our society and in our economy.

Unfortunately, these problems of retention and recruitment of public school teachers are exacerbated by the unfair tax treatment these professionals currently receive under our tax law. Specifically, teachers find themselves greatly disadvantaged by the lack of deductibility of professional development expenses and of the out-of- pocket costs of classroom materials that practically all teachers find themselves supplying. Let me explain.

As many other professionals, most elementary and secondary school teachers regularly incur expenses to keep themselves current in their field of knowledge. These include subscriptions to journals and other periodicals as well as the cost of courses and seminars designed to improve their knowledge or teaching skills. These expenditures are necessary to keep our teachers up to date on the latest ideas, techniques, and trends so that they can provide our children with the best education possible.

Furthermore, almost all teachers find themselves providing basic classroom materials for their students. Because of tight education budgets, most schools do not provide 100 percent of the material teachers need to adequately present their lessons. As a result, dedicated teachers incur personal expenses for copies, art supplies, books, puzzles and games, paper, pencils, and countless other needs. If not for the willingness of teachers to purchase these supplies themselves, many students would simply go without needed materials.

I realize that employees in many fields of endeavor incur expenses for professional development and out-of-pocket expenses. In many cases, however, these costs are fully reimbursed by the employer. This is seldom the case with school teachers. Other professionals who are self- employed are able to fully deduct these types of expenses.

Under the current tax law, unreimbursed employee expenses are deductible generally, but only as miscellaneous itemized deductions. However,

there are two practical hurdles that effectively make these expenses non-deductible for most teachers.

The first hurdle is that the total amount of a taxpayer's deductible miscellaneous deductions must exceed two percent of adjusted gross income before they begin to be deductible.

The second hurdle is that the amount in excess of the two percent floor, if any, combined with all other deductions of the taxpayer, must exceed the standard deduction before the teacher can itemize. Only about a third of taxpayers have enough deductions to itemize.

The unfortunate effect of these two limitations is that, as a practical matter, only a small proportion of teachers are able to deduct their professional development and out-of-pocket supplies expenses.

Let me illustrate this unfair situation with an example.

Let us consider the case of a fifth-year high school English teacher in Utah whom I will call Alice White Head. Alice is single and earns $48,000 per year. Last year she incurred $1,050 for a course she took over the summer to increase her knowledge of English literature. She also spent $450 for classroom supplies out of her own pocket. She was not reimbursed for either of these expenses, which totaled $1,500, by her school district. Under current law, Alice's expenditures are deductible, subject to the limitations I mentioned. The first limitation is that her expenses must exceed two percent of her income before they begin to be deductible. Two percent of $48,000 is $960. Thus, only $540 of her $1,500 total expenses is deductible, that portion that exceeds $960.

As a single taxpayer, Alice's standard deduction for 2006 is $5,150. Her total itemized deductions, including the $540 in miscellaneous deductions for her professional expenses and out-of-pocket classroom supplies, fall short of the standard deduction threshold. Therefore, not even the $540 of the original $1,500 in professional development expenses and out-of-pocket costs are deductible for Alice. What the first limitation did not block, the second one did, and Alice gets no deduction at all under the current law.

The way I see it, this situation is just not fair. Also, the tax treatment of teacher's expenses certainly does not help solve our teacher retention and recruitment problems.

To help alleviate this long-standing problem, five years ago I introduced the Teacher Equity for School Teachers Act of 2001. This legislation would have provided an unlimited tax deduction for the out- of-pocket expenses of school teachers for classroom supplies and other needed materials to help a teacher do his or her job. The bill would have also allowed teachers to take a deduction for their professional development expenses.

Rather than being available only for those who are able to itemize their deductions, this bill would have made these expenses ``above-the- line'' deductions, meaning they would be deductible whether or not the teacher itemized on their tax return.

Unfortunately, only a part of this bill was enacted. The 2001 tax bill included an above-the-line deduction for $250 for the costs of classroom expenses. While this was a great step in the right direction, it did not go nearly far enough. Moreover, the provision has now expired, and it is not clear when Congress is going to extend it.

The bill I am introducing today would do three things. First, it would reinstate the above-the-line deduction for teachers' out-of- pocket expenses for classroom supplies, make it permanent, and remove the $250 cap. Second, it would provide an unlimited deduction for the professional development expenses for school teachers. Finally, to assist in the recruitment of teachers in the most needed fields, it would provide an unlimited deduction for the cost of professionals in the fields of math, science, and technology to certify to become public school teachers.

Under my bill, the Alice of my example would be allowed to deduct all $1,500 of her professional development and classroom supplies expenses, whether she itemized or not. This would help provide tax equity, and a measure of much-needed tax relief for an underpaid professional. It would also help retain current public school teachers and attract new ones to this vital field.

Some might argue that such a generous deduction would be giving teachers preferential treatment. I disagree.

Most organizations provide training for their employees that is fully deductible to the organization and non-taxable to the employee. Yet public teachers, who are some of the most important professionals in our society, are left to foot the bill for these needed costs on their own. Also, office supplies and instructional materials are fully deductible to businesses. Should not teachers who provide these similar materials for their classrooms be afforded the same tax treatment?

Others may question the wisdom of my bill granting an unlimited tax deduction. ``Why not place a limit or a cap on the amount that may be deducted?'' some might ask. Again, I respectfully disagree with such critics. It is important to keep in mind the differences between a tax deduction and a tax credit. My bill calls for tax deductions, which reduce the amount of income that is subject to tax, and not for a credit, which is a dollar-for-dollar reduction in the amount of tax that is due.

With a tax deduction, a public school teacher is not receiving a cash subsidy or reimbursement for his or her expenses. Rather, he or she is merely obtaining a reduction in the amount of income that is taxed. Thus, the most benefit the teacher would receive under my bill would be a 35 percent reduction in the cost of the professional development, supplies, or certification expenses. This means that the teacher is still responsible for paying for the biggest portion of these costs. I do not believe that our public school teachers will abuse such an unlimited deduction. They will use their common sense and they will spend the appropriate amounts for their expenses.

Support for mathematics and science education at all levels is necessary to improve the global competitiveness of the United States in science and energy technology.

I endorse the efforts of my some of my colleagues to encourage more of our best and brightest students choose these fields of study. Support for qualified STEM teachers (Science, Technology, Engineering, and Mathematics) is equally important. If we are successful in increasing the supply for STEM students, we will need to increase the supply of STEM teachers.

This bill will provide incentives for these professionals to enter the teaching profession by allowing expenses in connection with teacher certification to be fully deductible, above-the-line, the same as the professional development and supplies expenses of teaching professionals.

Mr. President, this bill would provide modest tax equity for teachers who, for too long, have been footing the bill for improving the quality of teaching by themselves. It is time that Congress recognized this unfairness and corrected it.

I thank the Senate for the opportunity to address this issue today, and I urge my colleagues to support this legislation.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce the REIT Investment Diversification and Empowerment Act of 2006 (RIDEA). This legislation would make a handful of relatively minor, but nonetheless important, changes to the tax rules governing Real Estate Investment Trusts to permit REITs to better meet the challenges of evolving market conditions and opportunities.

As most of my colleagues know, Real Estate Investment Trusts are companies that own, and in most cases, operate income-producing real estate. Congress created REITs in 1960 to give everyone the ability to invest in large-scale commercial properties in a very liquid way. The REIT industry has grown dramatically in size and importance to the U.S. economy since then, and in the last ten years in particular.

While the tax laws governing REITs are very good, from time to time they need to be modified to keep pace with the changes in the marketplace and in our economy. I am pleased to have supported, along with many of my colleagues, several tax bills that have been enacted in the past decade or so to modernize the tax treatment of Real Estate Investment Trusts.

Federal tax law requires that REITs meet specific tests regarding the composition of their gross income and assets. For example, 95 percent of their annual gross income must be from specified sources such as dividends, interests and rents, and 75 percent of their gross income must be from real estate-related sources. Similarly, at the end of each calendar quarter, 75 percent of a REIT's assets must consist of specified ``real estate'' assets. Consequently, REITs must derive a majority of their gross income from commercial real estate.

Failure to meet these tests can result in loss of REIT status, although with the enactment of the REIT Improvement Act in 2004, it may be possible for a REIT to pay a monetary penalty and bring itself into compliance in order to avoid such a result if the REIT can demonstrate reasonable cause for such failure.

Commercial real estate represents more than six percent of this country's gross domestic product and is a key generator of jobs and other economic activities. For example, REITs have invested over $1.2 billion in my home State of Utah and have thus been a major contributor to our robust economy. Over the past 46 years, Real Estate Investment Trusts have fulfilled

Congress' vision by making investments in large scale, capital intensive commercial real estate available to all investors.

Changes to the REIT rules that Congress has made in the past decade have allowed REITs to serve better their tenants while maximizing returns to REIT shareholders.

The bill I introduce today would further modify the REIT tax rules to conform to constantly evolving business realities, such as the growing importance of cross-border trade and the increased velocity of the competitive marketplace, while still focusing REITs on commercial real estate activities.

Specifically, the bill includes five titles.

The first would clarify the tax treatment of foreign currency gains attributable to overseas real estate investment. This is important as U.S. REITs continue to expand their investments overseas.

The second title would increase the permissible ownership of a REIT in a taxable REIT subsidiary to 25 percent from the current-law 20 percent. This change would bring the REIT rules into conformity with similar rules governing mutual funds.

Title III of the bill would update the safe harbor test for purposes of the 100 percent excise tax in relation to dealer sales. This would help REITs more prudently manage the timing and extent of their asset dispositions.

The bill's fourth title would conform the tax treatment of health care facilities to that of lodging facilities by treating as qualifying income rental payments attributable to a health care facility made to a REIT from a taxable REIT subsidiary. This change would allow health care REITs more flexibility.

Finally, the bill's fifth title would amend the REIT rules to provide that income from, and interests in, foreign-qualified REITs would be treated as qualifying REIT income and assets under the U.S. REIT rules under certain circumstances. This change is important because about 20 countries have now enacted legislation that closely resembles our REIT rules, and many U.S. REITs may wish to invest in a non-U.S. REIT. This would allow them to do so with a minimum of complexity.

I urge my colleagues to review this bill and lend their support to it. I realize that it is very late in the second session of the 109th Congress, and there is little time for us to consider newly-introduced tax bills. However, I hope to reintroduce this legislation in the next Congress if we do not get a chance to consider it this year.

I ask unanimous consent that a section-by-section analysis of the REIT Investment Diversification and Empowerment Act and the text of the bill be printed in the Record.

Mr. President, I rise to introduce the National Fuels Initiative of 2006. This act presents to this Congress a plan to bring meaningful reductions in the amount of oil we consume in the United States and reduce our dependency on oil imports. Dependence on imported oil has put the United States in a position that no great power should tolerate. Our economic health is subject to forces far beyond our control, including the decisions of hostile countries. We maintain a massive military presence overseas, partly to preserve our oil lifeline. We have lost leverage on the international stage and are daily exacerbating the problem by participating in an enormous wealth transfer to authoritarian nations that happen to possess the commodity that our economy can least do without. The hundreds of billions of dollars we spend on oil imports each year weakens our economy, enriches hostile regimes, and is used by some to support terrorism.

In the absence of revolutionary changes in energy policy, we are risking multiple disasters for our country that will constrain living standards, undermine our foreign policy goals, and leave us highly vulnerable to the machinations of rogue states. There are at least six threats posed by oil dependence. First oil is vulnerable to supply disruption as a result of natural disasters, wars, and terrorist attacks. Price shocks resulting from a major supply loss can put the U.S. economy into recession. Second, global oil reserves are becoming more limited as easy supply is depleted, global demand rapidly increases, and governments exert more control over reserves. This makes oil more expensive in the short term, and creates the prospect that supplies may not be accessible in the future. Third, some oil-rich nations are using energy as an overt weapon. Adversarial regimes from Venezuela, to Iran, to Russia are using energy supplies as leverage against their neighbors. Fourth, hundreds of billions of dollars in oil export revenues flowing to authoritarian regimes increase corruption and hurt democratic reform. Some oil-rich nations are using this money to invest in terrorism, instability, or demagogic appeals to populism. Fifth, the threat of global climate change has been made worse by inefficient and unclean use of non-renewable energy like oil. This could bring about drought, famine, disease, and mass migration. And finally, dependence on oil increases instability and undermines development in much of the developing world. Rising energy costs can undermine our foreign assistance and hurt stability, development, disease eradication, and efforts to combat the root causes of terrorism.

The new geo-political reality emerging from the global energy situation and United States dependence on oil imports demand that we dramatically decrease the amount of oil we consume. In March 2006, I delivered an address at the Brookings Institution in which I described ``a shifting balance of realism'' from those who believe in the immutability of oil's domination of our economy and a laissez faire approach to energy policy to those who recognize that our Nation has no choice but to seek a major reorientation in the way we get our energy. Marginally reducing our reliance on imported oil over the course of the next few decades via the slow progress of market forces will be welcome, but by the time a sustained energy crisis fully motivates market forces, we are likely to be well past the point where we can save ourselves from extensive suffering. We must respond to our energy vulnerability as a crisis. This is the very essence of a problem requiring Congressional action.

The heart of America's geostrategic problem is reliance on imported oil in a market that is dominated by volatile and hostile governments. We can start to break petroleum's grip right now. The key is to replace oil used in transportation with renewable fuels and to improve the fuel efficiency of our cars and trucks.

I outlined the 5 central components of this energy plan at the Richard G. Lugar--Purdue University Summit on Energy Security on August 29th, 2006. First, this bill sets a goal for the United States to expand production of renewable fuels to at least 100 billion gallons a year by 2025. Some of this added production will come from current corn-based ethanol and biodiesel, but a great majority will be from emerging cellulosic technology allowing ethanol from diverse sources of renewable biomass. Second, virtually all new cars sold in America should be flex-fuel capable. These vehicles give Americans the choice to use E-85, a blend of 85 percent ethanol and 15 percent gasoline, or regular gasoline. This bill would require that virtually all vehicles would be manufactured as flexible fuel vehicles within ten years. This provision was also part of the Biomass Security Act of 2006 which I joined Senator Harkin in introducing earlier this year. Third, roughly 25 percent of our nation's fueling stations should offer E-85 within the next ten years. This provision was also part of the Biomass Security Act of 2006. This will give consumers choice and help spur investment in renewable fuel production. Fourth, the bill would enact increased mileage standards that set a target of steadily improving fuel economy every year, as well as encourage research into new advanced technology vehicles such as hybrids and coal-based transportation fuels. I joined Senator Obama in introducing this provision earlier this year as the Fuel Economy Reform Act of 2006. Finally, the bill would establish a revolutionary variable alternative fuel tax credit to support growth of alternative fuel production. While this novel portion of the bill should be further debated and improved, its aim is to increase investment in cellulosic ethanol, coals to liquid, and other non-petroleum based fuels by reducing risks posed by oil price manipulation of foreign regimes.

We must move now to address our energy vulnerability because sufficient investment cannot happen overnight, and it will take years to build supporting infrastructure and to change behavior. Americans need to know exactly what the plan is and how we will achieve it. We not only must understand how to bring alternatives to the market, we must establish what degree of change would improve our national security situation, then tailor national policy to achieve that goal. The energy plan presented in this bill is a package of proposals that would dramatically improve America's security posture. The plan would achieve the replacement of 6.5 million barrels of oil per day by volume--the rough equivalent of one third of the oil used in America and one half of our oil imports. It would provide more jobs for Americans instead of sending a deluge of money to hostile countries, support our farmers instead of foreign terrorists, and promote green fuels over fossil fuels.

I ask unanimous consent that the full text of this bill be printed in the Record.

Mr. President, I rise today to introduce the ``NATO Freedom Consolidation Act of 2006. I am pleased that the Majority Leader, Senator Frist, Senator Biden, and Senator Smith have joined me in proposing this important legislation.

The goal of this bill is to reaffirm United States support for continued enlargement of NATO to democracies that are able and willing to meet the responsibilities of membership. In particular, the legislation calls for the timely admission of Albania, Croatia, Georgia, and Macedonia to NATO and authorizes security assistance for these countries in Fiscal Year 2007. Each of these countries has clearly stated its desire to join NATO and is working hard to meet the specified requirements for membership. The bill also affirms that the United States stands ready to consider, and if all applicable criteria are satisfied, to support efforts by Ukraine to join NATO, should Ukraine decide that it wishes to meet the responsibilities of membership in the Alliance.

I believe that eventual NATO membership for these four countries would be a success for Europe, NATO, and the United States by continuing to extend the zone of peace and security. Albania, Croatia, and Macedonia have been making progress on reforms through their participation in the NATO Membership Action Plan since 2002. Unfortunately, Georgia has not yet been granted a Membership Action Plan but nevertheless has made remarkable progress. This legislation will provide important incentives and assistance to the countries to continue the implementation of democratic, defense, and economic reforms.

Since the end of the Cold War, NATO has been evolving to meet the new security needs of the 21st century. In this era, the threats to NATO members are transnational and far from its geographic borders. There is strong support among members for NATO's operation in Afghanistan, and for its training mission in Iraq. NATO's viability as an effective defense and security alliance depends on flexible, creative leadership, as well as the willingness of members to improve capabilities and address common threats.

If NATO is to continue to be the preeminent security Alliance and serve the defense interests of its membership, it must continue to evolve and that evolution must include enlargement. Potential NATO membership motivates emerging democracies to make important advances in areas such as the rule of law and civil society. A closer relationship with NATO will promote these values and contribute to our mutual security. Georgia is a young democracy that has made tremendous progress since the ``Rose Revolution.'' It is situated in a critical geostrategic location and his host to a large portion of the Baku- Tbilisi-Ceyhan pipeline that carries important energy resources to the West from Azerbaijan and, in the future, Kazakhstan. Georgia is resisting pressure from breakaway republics backed by Moscow. In the past, border disputes have been identified as reasons a country may not be invited to join NATO. But in this case, Russia's action, not Georgia's, is frustrating Tbilisi's NATO aspirations.

Three years ago, the United States Senate unanimously voted to invite seven countries to join NATO. Today, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia are making significant contributions to NATO and are among our closest allies in the global war on terrorism. It is time again for the United States to take the lead in urging its allies to bring in new members, and to offer

timely admission of Albania, Croatia, Georgia, and Macedonia to NATO.