Captive Supply Reform Act

Mr. President, Senator Hatch, Senator Brownback and I are pleased to introduce today the Project BioShield II Act of 2005.

This is the fourth bill I have introduced on this subject, and the third with Senator Hatch as my lead cosponsor. We are delighted today to be joined by Senator Brownback, a leading advocate for research to cure deadly tropical diseases.

None of us on the Hill--especially those of us with offices in the Hart Building--will forget October 15, the date of the anthrax attack on Senator Daschle's office. This date is the bioterrorism equivalent of September 11. We also need to remember October 5, the third anniversary of the 2001 anthrax death of Bob Stevens, a photo editor at American Media in Boca Raton, Florida, and November 17, the third anniversary of the discovery of a similar anthrax laced letter mailed to Senator Leahy. Similar anthrax attacks during these weeks were directed at NBC, ABC, CBS and other news organizations. All told five people died and thousands who might have been exposed were put on Cipro, including many of us and many of our staff.

This attack on civilians with weapons grade anthrax was unprovoked. And unlike the case with the 9/11 attacks, we still don't know who mailed the anthrax letters. As with the 9/11 attacks, we were totally unprepared for the anthrax-laced letters. We are responding forcefully to the 9/11 attacks--the commission that Senator McCain and I proposed has issued a superb report and the Government Affairs Committee, where I serve as the Ranking Democrat, is hard at work translating its recommendations into legislation. Unfortunately our response to the 10/ 15 anthrax attack has not been as forceful.

Unlike our response to 9/11, we have not seemed to consider the 10/15 attack to be the equivalent of a declaration of war. While we have taken a few constructive steps to strengthen our Bioterror defenses, we remain painfully vulnerable to another Bioterror attack, or a chemical or radiological attack.

Many of us believe that enactment of BioShield I, last July, is a step in the right direction, but we don't believe that BioShield is sufficient. If we listen carefully, we will hear that the biopharma industry--which is hiding on this issue--is saying that BioShield is not enough. So we already have strong warning signs that more needs to be done.

There is no terror threat greater than that of Bioterror. With an attack with a plane, a chemical attack or a radiological dispersion device, dirty bomb, the loss of life can be catastrophic, but the perimeter of the attack is fixed. With an infectious disease, the perimeter of an attack might grow exponentially as the infection spreads. It is possible to kill thousands with a bomb, chemical or radiation, but it is possible to kill millions with a bioterror pathogen.

In the 2001 anthrax attack, the terrorist wrote a note in the letter to Senator Daschle that said, ``09-11-01. You can not stop us. We have this anthrax. You die now. Are you afraid? Death to America. Death to Israel. Allah is great.'' If this note had not been included in the letter, and if the intern who opened the letter hadn't been suspicious, it is possible that some Senators and many Capitol Hill staff from our offices--perhaps hundreds--might have died. We would only have discovered the attack in hospital emergency rooms, where Cipro might have proven to be ineffective. Cipro works as a prophylaxis only when it catches anthrax early, before the toxins are released into the bloodstream, which can happen within 24 hours of an infection. Our current anthrax vaccine is administered in six shots over 18 montns.

The 9/11 Commission report states that al-Qaida ``was making advances in its ability to produce anthrax prior to Sept. 11'' and cited former CIA Director George Tenet as warning that an anthrax attack is ``one of the most immediate threats the U.S. is likely to face.'' Russia developed dozens of strains of anthrax and the security at these former bioweapons laboratories is suspect. It is estimated that a mason jar of anthrax spores sprayed over an urban area could infect 400,000 residents, and if undetected until they started showing up in emergency rooms, kill half of them. It is also estimated that one hundred anthrax laced letters could cross contaminate thirty million letters and infect 10,000 people with anthrax. Imagine what would happen if our mail system--which processed over 200 billion pieces of mail last year--were closed for a few months. What we need, and don't yet have, is a therapeutic that disarms the anthrax toxins at a late stage of the disease--which is the aim of a pending RFP at the Department of Health and Human Services.

We saw the potential for morbidity and mortality, and massive economic disruption, with SARS. When SARS was rampant, Beijing, Hong Kong and Shanghai closed down. Quarantines were imposed and China authorized the death penalty on anyone who willfully spread the disease. During the epidemic, there were reports that the SARS virus was mutating to become more virulent. In China's countryside, fear of SARS has led to some villages setting up roadblocks to keep away people from Beijing and at least four riots against quarantine centers have been reported in recent days. Thousands were quarantined in China. In the end SARS spread to thirty countries on five continents, sickening nearly 9,000 and killing 850. SARS is a zoonotic disease that apparently can jump back and forth between animals and man, which makes it much more difficult to eradicate it. We may not have seen the last of it.

We can also remember the devastating impact of the 1918 Spanish flu pandemic that killed more than died in the first World War, about 30-40 million people equivalent to 100 million today. In the month of October, 1918, 200,000 Americans died of the disease, 43,000 soldiers died, and 28 percent of our population was infected. The flu's lethality rate was only 2.5 percent the lethality rate of the most common form of smallpox, variola major, is 30 percent and for hemorrhagic smallpox it approaches 100 percent. The lethality rate for SARS was about 15 percent. If the 1918 flu pandemic killed the equivalent of 100 million people, think of how many smallpox or SARS-- both of which could be weaponized by terrorists--could kill.

Public health authorities are concerned about the incidence of avian influenza in humans. There is now concrete evidence that this virus can be transmitted human-to-human. When humans contract the pathogen from birds, the death rates are very high; a majority die. Since January 2004, a total of 23 confirmed human cases of avian influenza virus infections have been reported in Vietnam with 19 deaths and 12 cases in Thailand with 9 deaths. These cases were associated with widespread H5Nl poultry outbreaks that occurred at commercial and small backyard poultry farms. Since December 2003, nine countries have reported H5Nl outbreaks among poultry. More than 100 million chickens have been culled in an effort to stop the outbreak. The virus now appears to be able to infect mammalian hosts, including pigs and cats, an unusual prowess for an avian virus. This raises concern as pigs are also hosts of human flu viruses and this could yield

a hybrid avian flu strain that can be passed human-to-human. The avian flu virus apparently is now carried by migratory birds so it may be very difficult to eradicate the virus. We have no vaccine for the disease and the one therapeutic Tamiflu--is only effective if given very early after the onset of symptoms. It is feared that the virus might evolve resistance to Tamiflu. Public health officials believe that in theory the avian flu could cause a ``pandemic killing millions of people worldwide, and possibly hundreds of millions.'' Whether H5N1 could be used as a Bioterror weapon against agriculture or humans is not known.

In 1947 there was an outbreak of smallpox in New York City. Eventually two of the twelve who were infected died. But the smallpox vaccination campaign was massive 500,000 New Yorkers received smallpox vaccinations the first day and eventually 6.35 million were vaccinated in less than a month, 85 percent of the city's population. President Truman was vaccinated prior to a trip to New York City.

If we suffered another smallpox outbreak, it is not likely that a vaccination campaign would go so smoothly. It is now estimated that if the current smallpox vaccine were deployed in the United States 350 to 500 individuals might die from complications. The current vaccine is not recommended for patients who have eczema or are immunosuppressed, HIV-positive or are pregnant. Even worse, based on a 1971 accidental release of smallpox from a Soviet bioweapons laboratory, some speculate that the Soviets successfully weaponized a rare and especially lethal form of smallpox, hemorrhagic smallpox, with near 100 percent lethality.

Mother Nature's pathogens are dangerous--smallpox, anthrax, plague, tularemia, glanders, typhus, Q fever, Venezuelan equine encephalitis, brucellosis, botulinum toxin, dengue fever, Lassa fever, Russian spring-summer encephalitis, Marburg, Ebola, Bolivian hemorrhagic fever, Argentinean hemorrhagic fever and fifty other pathogens could kill thousands or even millions. But on the horizon are more exotic and deadly pathogens.

We have reports that the Soviet Union developed genetically modified pathogens such as a hybrid plague producing diphtheria toxin. This manipulation increased virulence and made the plague microbe more resistant to vaccine. Other possibilities include a Venezuelan equine encephalomyelitis-plague hybrid is a combination of the virus and bacteria; we have no idea what symptoms such a pathogen would manifest or how we might diagnose or treat it. Other hybrid pathogens might be developed, including a Venezuelan equine encephalomyelitis-Ebola hybrid.

We have reports that the Soviet Union developed a powdered Marburg, a hemorrhagic fever where every cell and organ of the victim bleeds. Symptom of Marburg include kidney failure, recurrent hepatitis, inflammation of the spinal cord, bone marrow, eyes, testes, and parotid gland, hemorrhaging into the skin, mucous membranes, internal organs, stomach, and intestines, swelling of the spleen, lymph nodes, kidneys, pancreas, and brain, convulsions, coma and amnesia.

Genetically modified pathogens are another possibility. In 2001 the Journal of Virology reported that Australian scientists seeking to create a contraceptive for mice used recombinant DNA technology to introduce Interleukin 4 into mousepox and found that it created an especially virulent virus. In the words of the scientists, ``These data therefore suggest that virus-encoded IL-4 not only suppresses primary antiviral cell-mediated immune responses but also can inhibit the expression of immune memory responses.'' This public research suggests that introducing IL-4 can create an Andromeda stain of a virus, information of potential use to terrorist sociopaths. In addition, published studies describe how to create a recombinant vaccina virus to induce allergic encephalomyelitis in rabbits, and potentially--highly lethal smallpox virus capable of causing paralyses in humans and how to synthesize the polio virus in a biochemical laboratory .

Other possible pathogens--some of which the Soviet worked on--include antibiotic resistant pathogens. The Soviets apparently developed a strain of plague resistant to ten different antibiotics, and a strain of anthrax resistant to seven different antibiotics. Some claim the Soviets developed a strain of anthrax resistant to the current U.S. anthrax vaccine. A part of this research in a hamster model was published in ``Vaccine'' so this information is available to terrorists.

Other exotic pathogens might include autoimmune peptides, antibiotic induced toxins, and bioregulators and biomodulators. An autoimmune peptide might stimulate an autoimmune attack against the myelin that sheaths the target's nerve cells. Antibiotic induced toxins are hybrid bacteria-viruses where antibiotics administered to treat the bacterial infection stimulate the virus to release a deadly toxin; the greater the doses of antibiotics, the more toxins are released. Bioregulators and biomodulators are synthetic chemical that bond to and disrupt receptors that govern critical functions of the target, including nerve, retinal, liver, kidney, heart, or muscle cells to cause paralysis, blindness, schizophrenia, coma, or memory loss.

Some of these might be available now from the 60 bioterror research laboratories maintained by the Soviet Union. Eventually, terrorists might be able to set up full-blown biotechnology laboratories. Rogue states could do so and they might then transfer bioweapons to terrorists or lose control of them. Over the long term, as the power of modern biotechnology grows, the bioterror threat will grow and increasingly virulent and exotic weapons might become threats.

In November 2003 the CIA's Office of Transnational Issues published ``Our Darker Bioweapons Future,'' which stated that the effect of bioengineered weapons ``could be worse than any disease known to man.'' The rapid evolution of biotechnology makes monitoring development ofbioweapons extremely difficult. Some ofthese weapons might enable the development of ``a class of new, more virulent biological agents engineered to attack distinct biochemical pathways and elicit specific effects, claimed panel members. The same science that may cure some of our worst diseases could be used to create the world's most frightening weapons.'' It specifically mentioned the possibility of ``binary BW agents that only become effective when two components are combined (a particularly insidious example would be a mild pathogen that when combined with its antidote becomes virulent)''; ``designer'' BW agents created to be antibiotic resistant or to evade an immune response; weaponized gene therapy vectors that effect permanent change in the victim's genetic makeup; or a ``stealth'' virus, which could lie dormant inside the victim for an extended period before being triggered.

Illustrating the speed with which biotechnology is advancing to create new bioterrorism threats is a recent announcement by Craig Venter and his Institute for Biological Energy Alternatives that in fourteen days they had synthetically created working copies of the known existing bacteriophage virus Phi X174. Other researchers had previously synthesised the poliovirus, which is slightly bigger, employing enzymes usually found in cells. But this effort took years to achieve and produced viruses with defects in their code. So the timescale has shifted from years to weeks to make a virus. There are other bigger viruses that would require more time to assemble. Venter asserts that his team could make a bacteria with about 60 times larger genome from scratch within about a year of starting. Does this mean that the debate about whether to destroy smallpox virus stocks is pointless because any virus or bacteria whose DNA sequence is published is eventually going to be easily creatable by labs all around the world?

These pathogens might be deployed by terrorists, sociopaths or rogue states that have no compunctions about killing massive numbers of ``infidels'' or enemies in the west. They would experience great joy in sowing widespread panic, injury and death in America. Osama Bin Laden's spokesman, Sulaiman Abu Ghaith, bragged that al Qaeda has ``the right to kill 4 million Americans'' in response to deaths he claims the west has inflicted on Muslims. We are facing sociopaths with no compunction about using

whatever weapons of mass destruction they can develop or secure. They would see the potential to unleash a weapon in North America and trust that our borders would be closed so that it would only rage here and not spread to the Muslim world.

The Brookings Institution estimated that a bioterror attack would cause one million casualties and inflict $750 billion in economic damage. An earlier Office of Technology Assessment found that there might be three million casualties. If there are this many casualties, what can we expect in the way of public panic and flight? A 2004 poll finds that ``most Americans would not cooperate as officials would expect them to during a terrorism incident.'' Only 2/5 said that they'd ``follow instructions to go to a public vaccination site in a smallpox outbreak'' and only 3/5 would ``stay in a building other than their own home . . .'' A vivid vision of what an attack might look like is found in Albert Camus' The Plague, with its incinerators and quarantine camps. We can review the history of the Black Death, which killed up to one half of Europe's population between 1348 and 1349.

Imagine what would happen if the attack involves a pathogen for which we have no diagnostic, vaccine or therapeutic. If we resorted to quarantines, what would the rules of engagement be for the police and military forces we deploy to enforce it? Would it be possible to establish an effective quarantine if there is mass panic and flight? Would our hospitals be overwhelmed by the ``worried well'' ? Would public health workers continue to serve or also flee? If our hospitals are contaminated, where would Americans receive medical care for non- terror related emergencies?

What would happen if a bioterror, chemical or radiological attack closed Atlanta's Hartsfield International Airport--which handled nearly eighty million passengers last year? Or what would happen if we put a hold on the one hundred and twenty million international airline arrivals and departures we see each year? What would happen if we were forced to close our borders with Mexico and Canada--with 500 million crossings last year? What would happen if we restrained the 2.79 trillion automobile passenger miles driven in the U.S., one billion of which exceeded 100 miles?

What would happen if a terror attack rendered certain types of business activity uninsurable? What will happen if large swaths of residential real estate--none of which is currently insured for acts of terror--were contaminated and rendered worthless with anthrax spores?

We are vulnerable to a bioterror attack in many ways, but one of the most troubling is that we have essentially none of the diagnostics, therapeutics and vaccines we need to treat those who might be exposed or infected. If we don't have these medicines, we are likely to see quarantines and panic, which will amplify the damage and disruption. My office is on the 7th floor of the Hart Building, immediately above Senator Daschle's office. We were told if we immediately started a course of treatment with Cipro we would not die, so there was no panic. Think what would have happened if the government had said, ``We don't know what this is, it's deadly, we have no way to tell who has been exposed, and we have no medicines to give you.''

In the summer of 2000 the Defense Science Board found that we had only one of the fifty-seven diagnostics, drugs and vaccines we most need to respond to a bioterror attack, we had a therapeutic for chlamydia psittaci, a bacteria. It projected that we'd have twenty of the fifty-seven within 5 years and thirty-four within 20 years. But today we have only two of the fifty-seven countermeasures, we now have a diagnostic for anthrax.

At this rate of developing these medical countermeasures, we won't have twenty of them available until 2076 and we won't have thirty-four until 2132. This list does not include antibiotic resistant pathogens, hybrid pathogens, genetically modified pathogens, and a host of other exotic bioterror pathogens.

The Congress administration have not responded to the anthrax attack with an appropriate sense of urgency, especially with regard to the development of medicines. We have not responded with a crash industrial development program as we did when we developed radar during the Second World War or as we are now undoubtedly undertaking to detect roadside bombs. Reluctantly, I would characterize our national response as lackadaisical.

December 4 is the third anniversary of my introduction of legislation to provide incentives for the development of medical countermeasures-- including diagnostics, therapeutics and vaccines--for bioterror pathogens, S. 1764. Chairman Hatch, October 17 is the second anniversary of our introducing our first bill together on this subject, S. 3l4, and we introduced our current bill on March 19 of last year (S. 666). Twenty months ago President Bush proposed Project BioShield, a bill based on one of the twelve titles in our bills, and it was finally enacted into law on July 21. If we enact one of the titles of our bill every two years, it'll take 22 more years to complete our legislative work.

The critical issue for this hearing is whether Project BioShield, Public Law 108-276, is sufficient or whether we need to supplement it with BioShield II, a bill that you and I intend to introduce this Fall. BioShield is only one title of our proposal--the title that provides that the government will define the size and terms of the market for a Bioterror countermeasure in advance before a biopharma company puts its own capital at risk. This is a necessary first step; companies won't risk their capital to develop a product unless they can assess the possible rate of return, product sale on their investment.

Enacting BioShield is a step in the right direction. If we were to enact only one idea first, this is the right first step. We will now see how the Department of Health and Human Services implements this law. We will see what R&D priorities it sets, whether it projects a market for these products sufficiently large to engage the better biopharma companies in this research, and whether it sets contract terms that company Chief Financial Officers find acceptable.

Unfortunately, we all heard a deafening silence from biopharma industry--the target of this legislation--as BioShield was being considered. The industry did essentially nothing to fix the Administration's draft--which the industry privately stated was laced with dysfunctional provisions. The industry did essentially nothing to pass BioShield. And the industry has said essentially nothing since BioShield was enacted.

It is clear to me that BioShield is not sufficient to secure development of the medical countermeasures we need, indeed, I believe it is woefully insufficient.

The industry is skeptical that the government will be a reliable partner during the development bioterror countermeasures. The basis of its skepticism runs deep.

The industry points to the Cipro procurement as a case in point. In 1999, before the anthrax attack, Bayer, the developer of Cipro, was asked by FDA and CDC to secure a label indication for Cipro for anthrax. The government wanted to have one antibiotic available that was explicitly labeled for anthrax--it understands that patients might be reluctant to take a medicine for anthrax where it is not labeled for this indication. Bayer incurred the expenses to do this with no expectation of ever utilizing the product in this manner, and when the attack occurred, Cipro was the only therapeutic with a label indication for anthrax. Bayer handled this emergency with honor. It immediately donated huge stocks of Cipro, 2 million tablets to the Postal Service and 2 million tablets to the Federal government to be used to protect those who might have been exposed or infected. The government then sought to procure additional stocks of Cipro and demanded that Bayer sell it as one-fourth the market price. Threats were made by Members of Congress that if Bayer would not agree to this price the government might step in to challenge the patent for Cipro. Bayer readily agreed to the deep discount. We can assume that every other purchaser of Cipro then demanded this same price and that this cut Bayer's market return for Cipro. To add insult to injury, Bayer has had to defend itself from lawsuits by those who took Cipro in response to the attack even though it did what was asked, provided more than enough free product to treat

all patients and greatly reduced it's stockpile pricing. Bayer also was deeply concerned with employee and plant security risks when it was publicly identified as the sole source of this counter-bioterrorism agent.

The industry view this incident as proving that with regard to bioterrorism research, no good deed will go unpunished. If a large pharmaceutical company can be manhandled this way, what would happen to a small biotechnology company? The industry expects that if there is an attack, and the company has the indispensable medicine we need to respond to it, the government is likely to steal the product. The industry is deeply skeptical of the government already. It has very complex and often contentious relationships with other HHS agencies, including the Center for Medicare Services, the Food and Drug Administration, and the National Institute of Health. It has constant battles with state Medicaid agencies. This is not an industry that trusts government.

Some in Congress have proposed legislation that feed industry fears. In 1994 and 1995 legislation was introduced in the House, H.R. 4370, introduced on May 10, 1994, and H.R. 761, introduced on January 31, 1995, that provided the government with eminent domain power with regard to AIDS to confiscate ``all potential curatives and all data . . . regarding their development,'' including the patents for such compounds. Similarly, in 1999 and 2001 legislation was introduced in the House, H.R. 2927, introduced on September 23, 1999, and H.R. 1708, introduced on May 3, 2001, that provided for the compulsory licensing of ``any subject invention related to health'' where the government finds it ``necessary to alleviate health or safety needs'' or the patented material is ``priced higher than may be reasonably expected based on criteria developed by the Secretary of Commerce.'' Legislation has been introduced that would deny the benefits of the R&D tax credit for research by pharmaceutical companies where the products that arise from that research are sold at higher prices abroad than in the United States. See H.R. 3665 introduced on February 15, 2000.

The industry response to these threats to its patents must be seen in light of the events of March 14, 2000. On that day a White House spokesman apparently indicated that the government might move to challenge some biopharma industry patents for genes. The industry lost $40 billion in market capitalization in the panic that ensued on Wall Street. That was not only the beginning of a deep drought in biotech company financing, it was the beginning of the collapse of the entire NASDAQ market. A similar collapse and drought had occurred in 1993-1994 the Clinton Administration proposed that the prices of ``breakthrough drugs would be reviewed by a special government panel.''

The issue of price controls and patents was recently considered and rejected by NIH in response to a petition for the government to march- in on the patent of Abbott Laboratories for ritonavir, sold under the name of Norvir, an AIDS therapeutic. The petitioner, Essential Inventions, asked that the government cancel the license of this patent to Abbott, which it alleged was charging too much for Norvir. The petitioner had also been involved in the 1994-1995 NIH proceeding, where NIH reviewed the impact of its 1989 protocol to review whether ``reasonable'' prices were being charged by companies that had licenses with NIH. NIH found that this price review process was destroying the NIH technology transfer program--companies simply would not enter into agreements with NIH. As a result, NIH repealed the price review process. The new march-in petition raised essentially the same issues and if the petition had been granted, we could have expected that the NIH tech transfer process will be crippled--again, as it was from 1989- 1995. In rejecting the petition, NIH did not state, however, that is has no right to march-in based on the price of a product, implying that it could or might assert such power in the future. This can only have a chilling impact on companies considering entering into biodefense procurement and research agreements.

Aside from fears about government actions, we could not have picked a worse time to ask the industry to undertake a whole new portfolio of research. The biotech NASDAQ index stood at 1380 and it now stands at about 725. The Amex biotech index peaked at 801 and it now stands at about 525. The Dow Jones pharmaceutical index peaked at 420 and it now stands at about 275. The biotech industry raised $32 billion in capital in 2000 and only $16 billion last year. In June of this year, 36 percent of the public biotech companies had stock trading at less than $5 per share. There were 67 biotech IPOs in 2000 and only 7 last year. The industry losses each year continue run to $4 billion. The National Venture Capital Association reports that only 2 percent venture money went into biodefense following the October anthrax attack.

Of the 506 drugs publicly disclosed to be under development by the 22 largest pharmaceutical companies, only 32 are for infectious disease and half of these are aimed at HIV/AIDS. In 1967 we had 67 vaccine companies and in 2002 we had 12. World wide sales vaccines is about $6 billion, but the world wide sales of Lipitor are $10 billion.

In addition, it is not clear whether the government is able or willing to provide the industry with the operating margins--profits--it sees for its other products. The operating margin for successful biopharma companies is 2.76 to 3.74 times as great as the operating margins for major defense contractors. This means that the defense contractor model will not work to engage biopharma companies in developing medical countermeasures for bioterror agents. Whether the successful bipharma companies are ``too profitable'' is a separate issue. The issue addressed here is the operating margin that successful biopharma companies seek and expect as they assess lines of research to undertake. If the operating margin for biodefense research is less, or substantially less than the operating margin for non-biodefense research, it is not likely that these companies will choose to undertake biodefense research. This research is a voluntary undertaking putting their capital at risk; there is no requirement that they do this when the prospects for profits are not competitive with that from other lines of research.

Mostly we are seeing the industry hiding, not commenting on the pending legislation, not participating in the legislative process, and making every effort not to seem to be unpatriotic or greedy. Companies do not say in public that they are disinterested. They will not say what package of incentives would be sufficient to persuade them to take up biodefense work. They fear a debate on patents. They feel besieged by the current drug import debate, pressure from CMS over drug prices, and the debate over generic biologics. While I understand these fears, we simply have to know what it would take in the way of incentives to establish a biodefense industry. If the incentives in BioShield or BioShield II are not sufficient, we need to know what incentives are sufficient. We need to know what reassurances would persuade the industry that what happened to Bayer will never happen again. And only the industry can give us a clear answer to these questions. We cannot have a dialogue on these urgent national questions without the government listening and the industry speaking.

The goal of BioShield II is to shift the risk of countermeasure research and development to the industry. Given the skepticism of the industry about the reliability of the government as a partner, shifting the risk to the industry--with it risking its own capital to fund the R&D--will be difficult. But engaging the industry as entrepreneurs, rather than as defense contractors, is likely to be less expensive for the government and it's much more likely to secure the development of the medicines that we need.

If the Government funds the research, the industry can expect to receive the operating margins that are typically paid to defense contractors--8.5-9 percent. If the industry risks its own capital and funds the failures and cost overruns, the industry believes it would be justified demanding the operating margins that are typically paid in the commercial sector--28-32 percent.

If the Government funds the research, the industry expects that the government will control or own the patents associated with the medicines. If the industry funds the research, it

believes it has claims on all the patents.

The only companies that are likely to accept a defense contractor model are companies with no approved products, no revenue from product sales, and no other source of capital to keep the lights on. For them Government funding is ``non-dilution'' capital, meaning it's a form of capital that does not dilute the ownership shares of its current shareholders. Many biotech companies have stock trading in the low single digits, so they cannot issue another round of stock that would enrage the current shareholders. For them this Government funding might validate the scientific platform of the company, generate some revenue, and hype the stock.

Biotech industry executives state in private that if their capital markets strengthen they will be even less likely to consider bioterror countermeasure research. One CEO whose company has received an NIH grant for bioterror countermeasure research stated in private that his company would never have considered this entanglement with the Government if it had any other options to fund its research.

Our goal with BioShield IT should be to engage the successful biopharma companies in this research--companies that have brought products to the market--and persuade them that the Government will be a reliable partner. Then the risk of failure and cost overruns is shifted to the industry and we've engaged the companies with a track record of bringing products to the market. The Government will need to provide substantial rewards if--and only if--the companies do succeed in developing the medicines we need, but then the Government is only paying for results. When the Government funds the research, it funds a process with no guarantees of any success. Providing the industry with substantial rewards for success is a model that engages the industry as entrepreneurs, drawing on the greatest strength our Nation has in the war on terror.

Our bill addresses a critical question: who is in charge for Government if there's a mass casualty event and how do they lead the multifaceted response. The legislation sets up an interagency board to map out and develop the response to such an event and places a new Assistant Secretary Chief Medical Officer at the Department of Homeland Security as its chair. In addition, the new Assistant Secretary would lead the DHS assets and resources as part of this effort. While this proposal is the result of discussions with some of the experts in this area, we recognize there may be different points of view about the optimal structure for the medical response capabilities within DHS and the proposed structure in this bill is open to further discussion. I look forward to working with the chairman of the Senate Homeland Security and Government Affairs Committee, Senator Collins, and others in exploring these complex issues. On these issues, this bill is a discussion draft.

We should not need a 9/11 Commission report to galvanize the administration and the Congress to respond to the unprovoked and deadly bioterror attacks of 3 years ago. The threat could not be more obvious and what we need to do is also obvious. If we don't develop the diagnostics, therapeutics, and vaccines to protect those who might be exposed or infected, we risk public panic and quarantines. We have the world's preeminent biopharma industry and we need to put it to work in the national defense.

BioShield I is a step in the right direction, but it is a small step that does not take us where we need to go. We need to follow the implementation of BioShield very carefully and set clear metrics for determining its effectiveness. We should not wait to begin to review the policy options available to supplement BioShield. Senator Hatch and I will be proposing BioShield II and we will press for its consideration. We should press the biopharma industry to present its views on what it will take to engage it in this research and what it will take to establish a biodefense, research tool, and an infectious disease industry.

The American philosopher, George Santana said, ``Those who cannot remember the past are condemned to repeat it.'' It's only been 3 years since the anthrax attack but I fear our memory of it already has faded. Let this hearing stand as a clear statement that some of us in the Congress remember what happened and are determined not to permit it to happen again. War has been declared on us and we need to act as if we noticed.

Mr. President, today I am pleased to be joined by the Senator from South Carolina, Mr. Graham, in introducing legislation that requires Congress to act on what may be the most pressing domestic policy issue of our time, namely health care reform.

I travel to each of Wisconsin's 72 counties every year to hold town hall meetings. Year after year, the number one issue raised at these listening sessions is the same--health care. The failure of our health care system brings people to these meetings in droves. The frustration I hear, the anger and the desperation, have convinced me that we must change the system.

So many people now come to tell me that they used to think government involvement was a terrible idea, but not anymore. Now they tell me that their businesses are being destroyed by health care costs, and they want the government to step in. These costs are crippling our economy just as the nation is struggling to rebound from the loss of millions of manufacturing jobs.

Our health care system has failed to keep costs in check. Costs are skyrocketing, and there is simply no way we can expect businesses to keep up. So in all too many cases, employers are left to offer sub-par benefits, or to wonder whether they can offer any benefits at all. Employers cannot be the sole provider of health care when these costs are rising faster than inflation.

One option that could help employers, especially small businesses, reduce their health care costs is to have them form health care cooperatives, where employers lower costs by purchasing care as a group. I have introduced a bill in the Senate to make it easier for business to create these cooperatives.

But that legislation certainly isn't the magic bullet that can address the whole problem. We need to come up with more comprehensive ways to address rising costs. In most cases, costs are still passed on to employees, who then face enormous premiums that demand more and more of their monthly income. People tell me that they don't understand how anyone can afford these astronomical premiums, and what can you say to that?

Well, we can say that it's time to move toward universal coverage. I believe we can find a way to make universal coverage work in this country. Universal coverage doesn't mean that we have to copy a system already in place in another country. We can harness our Nation's creativity and entrepreneurial spirit to design a system that is uniquely American. Universal coverage doesn't have to be defined by what's been attempted in the past. What universal coverage does mean is ending a system where approximately 45 million Americans are uninsured, and where too many of those who are insured are struggling to pay their premiums, struggling to pay for prescription drugs, and struggling to find long term care.

We can't tolerate a system that strands so many Americans without the coverage they need. This system costs us dearly: Even though an estimated 45 million Americans are uninsured, the United States devotes more of its economy to health care than other industrial countries.

Leaving this many Americans uninsured affects all of us. Those who are insured pay more because the uninsured can't afford to pay their bills. And those bills are exceptionally high, because the uninsured wait so long to see a doctor. The uninsured often live sicker, and die earlier, than other Americans, so they also need a disproportionate amount of acute care.

In 2001 alone, health care providers provided $35 billion worth of uncompensated care. While providers absorb some of those costs, inevitably some of the burden is shifted to other patients. And of course the process of cost-shifting itself generates additional costs.

We are all paying the price for our broken health care system, and it is time to bring about change.

Over the years I have heard many different proposals for how we should change the health care system in this country. Some propose using tax incentives as a way to expand access to health care. Others think the best approach is to expand public programs. Some feel a national single payer health care system is the only way to go.

I don't think we can ignore any of these proposals. We need to consider all of these as we address our broken health care system.

As a former State legislator, I come to this debate knowing that States are coming up with some very innovative solutions to the health care problem.

So in addition to the approaches already mentioned, I think we really need to look at what our States are doing, and add to the menu of possibilities an approach under which each State decides the best way to cover its residents.

I favor an American-style health care reform, where we encourage creative solutions to the health care problems facing our country, without using a one-size-fits-all approach. I believe that states have a better idea about what the health care needs of their residents are, and that they understand what types of reform will work best for their State. So I am in favor of a State-based universal health care system, where States, with the Federal Government's help, come up with a plan to make sure that all of their residents have health care coverage.

This approach would achieve universal health care, without the Federal Government dictating to all of the states exactly how to do it. The Federal Government would provide States with the financial help, technical assistance and oversight necessary to accomplish this goal. In return, a State would have to make sure that every resident has coverage at least as good as that offered in the Federal Employee Health Benefits Program (FEHBP)--in other words, at least as good as the health insurance Members of Congress have.

States would have the flexibility to expand coverage in phases, and would be offered a number of Federal ``tools'' to choose from in order to help them achieve universal coverage. States could use any number of these tools, or none of them, instead opting for a Federal contribution for a State-based ``single-payer'' system. In addition to designing and implementing a plan to achieve universal care, States would also be required to provide partial funding of these plans. The Federal Government would approve each State plan, and would conduct oversight of the implementation of these plans.

Federal tools that States could choose from to help expand health coverage could include an enhanced Medicaid and SCHIP Federal match for expanding coverage to currently uninsured individuals; refundable and advanceable tax credits for the purchase of health insurance for individuals and/or businesses; the establishment of a community-rated health pool, similar to FEHBP, to provide affordable health coverage and expanded choices for those who enroll; and assistance with catastrophic care costs.

States could be creative in the State resources they use to expand health care coverage. For example, a State could use personal and/or employer mandates for coverage, use State tax incentives, create a single-payer system or even join with neighboring States to offer a regional health care plan.

The approach I have set forth would guarantee universal health care, but still leave room for the flexibility and creativity that I believe is necessary to ensure that everyone has access to affordable, quality health care.

As I have noted, there have been a number of interesting proposals to move us to universal health care coverage. While I will be advocating the State-based approach that I have just outlined, others have proposed alternative approaches that certainly merit consideration and debate.

And this brings us to the legislation Senator Graham and I are introducing today, because, the reason we haven't reformed our health care system isn't because of a lack of good ideas. The problem is that Congress and the White House refuse to take this issue up. Despite the outcry from businesses, from health care providers, and from the tens of millions who are uninsured or underinsured or struggling to pay their premiums, Washington refuses to address the problem in a comprehensive way.

That is why we are introducing this bill. Our legislation will force Congress to finally address this issue. It requires the Majority and Minority Leaders of the Senate, as well as the Chairs of the Health, Education, Labor, and Pensions Committee and the Finance Committee, to each introduce a health care reform bill in the first 30 days of the session following enactment of the bill. If a committee chair fails to introduce a bill within the first month, then the ranking minority party member of the respective committee may introduce a measure that qualifies for the expedited treatment outlined in my bill.

The measures introduced by the Majority Leader and Minority Leader will be placed directly on the Senate Calendar. The measures introduced by the two committee chairs, or ranking minority members, will be referred to their respective committees.

The committees have 60 calendar days, not including recesses of 3 days or more, to review the legislation. At the end of that time, if either committee fails to report a measure, the bills will be placed directly on the legislative calendar.

If the Majority Leader fails to move to one of the bills, any Member may move to proceed to any qualifying health care reform measure. The motion is not debatable or amendable. If the motion to proceed is adopted, the Chamber will immediately proceed to the consideration of a measure without intervening motion, order, or other business, and the measure remains the unfinished business of the Senate until the body disposes of the bill.

Similar procedures are established for House consideration.

I want to emphasize, my hill does not prejudge what particular health care reform measure should be debated. There are many worthy proposals that would qualify for consideration, and this bill does not dictate which proposal, or combination of proposals, should be considered.

But what my bill does do is to require Congress to act.

It has been over 10 years since the last serious debate over health care reform was killed by special interests and the soft money contributions they used to corrupt the legislative process. The legislative landscape is now much different. Soft money can no longer be used to set the agenda, and businesses and workers are crying out as never before for Congress to do something about the country's health care crisis.

It has been over 10 years since we've had any debate on comprehensive health care reform. We cannot afford any further delay, because I believe the cost of inaction is too great. I urge my colleagues to support the Reform Health Care Now Act of 2005.

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

Mr. President, I am introducing the Crane Conservation Act of 2005. I am very pleased that the Senators from Idaho, Mr. Crapo, Florida, Mr. Martinez, Wisconsin, Mr. Kohl and Maryland, Mr. Sarbanes, have joined me as cosponsors of this bill. I propose this legislation in the hope that Congress will do its part to protect the existence of these birds, whose cultural significance and popular appeal can be seen worldwide. This legislation is particularly important to the people of Wisconsin, as our State provides habitat and refuge to several crane species. But this legislation, which authorizes the United States Fish and Wildlife Service to distribute funds and grants to crane conservation efforts both domestically and in developing countries, promises to have a larger environmental and cultural impact that will go far beyond the boundaries of my home state. This bill is similar to legislation that I introduced in the 107th and 108th Congresses.

In October of 1994, Congress passed and the President signed the Rhinoceros and Tiger Conservation Act. The passage of this act provided support for multinational rhino and tiger conservation through the creation of the Rhinoceros and Tiger Conservation Fund, or RTCF. Administered by the United States Fish and Wildlife Service, the RTCF distributes up to $10 million in grants every year to conservation groups to support projects in developing countries. Since its establishment in 1994, the RTCF has been expanded by Congress to cover other species, such as elephants and great apes.

Today, with the legislation I am introducing, I am asking Congress to add cranes to this list. Cranes are the most endangered family of birds in the world, with 11 of the world's fifteen species at risk of extinction. Specifically, this legislation would authorize up to $5 million of funds per year to be distributed in the form of conservation project grants to protect cranes and their habitat. The financial resources authorized by this bill can be made available to qualifying conservation groups operating in Asia, Africa, and North America. The program is authorized from Fiscal Year 2006 through Fiscal Year 2010.

In keeping with my belief that we should balance the budget, this bill proposes that the $25 million in authorized spending over five years for the Crane Conservation Act established in this legislation should be offset through the Secretary of Interior's administrative budget.

I am offering this legislation due to the serious and significant decline that can be expected in crane populations worldwide without further conservation efforts. Those efforts have achieved some success in the case of the North American whooping crane, the rarest crane on earth. In 1941, only 21 whooping cranes existed in the entire world. This stands in contrast to the over 450 birds in existence today. The North American whooping crane's resurgence is attributed to the birds' tenacity for survival and to the efforts of conservationists in the United States and Canada. Today, the only wild flock of North American whooping cranes breeds in northwest Canada, and spends its winters in coastal Texas. Two new flocks of cranes are currently being reintroduced to the wild, one of which is a migratory flock on the Wisconsin to Florida flyway.

The movement of this flock of birds shows how any effort by Congress to regulate crane conservation needs to cross both national and international lines. As this flock of birds makes its journey from Wisconsin to Florida, the birds rely on the ecosystems of a multitude of states in this country. In its journey from the Necedah National Wildlife Refuge in Wisconsin to the Chassahowitzka National Wildlife Refuge in Florida in the fall and eventual return to my home state in the spring, this flock also faces threats from pollution of traditional watering grounds, collision with utility lines, human disturbance, disease, predation, loss of genetic diversity within the population, and vulnerability to catastrophes, both natural and man-made.

The birds also rely on private landowners, the vast majority of whom have enthusiastically welcomed the birds to their rest on their land. Through its extensive outreach and education program, the Whooping Crane Eastern Partnership has obtained the consistent support of farmers and other private landowners to make this important recovery program a success. On every front, this partnership is unique. One of the program's supporters has told me that this program is the conservation equivalent of putting a man on the moon. I think it is quite appropriate then that the Smithsonian announced that one of the

ultralight planes from Operation Migration, which leads the migration from Necedah to Chassahowitzka, will be inducted into the National Air and Space Museum. The plane will be on display in the Museum early next year. I cannot think of a better way to showcase this innovative conservation program.

Despite the remarkable conservation efforts taken since 1941, however, this species is still very much in danger of extinction. While over the course of the last half-century, North American whooping cranes have begun to make a slow recovery, many species of crane in Africa and Asia have declined, including the sarus crane of Asia and the wattled crane of Africa.

The sarus crane stands four feet tall and can be found in the wetlands of northern India and south Asia. These birds require large, open, well watered plains or marshes to breed and survive. Due to agricultural expansion, industrial development, river basin development, pollution, warfare, and heavy use of pesticides prevalent in India and southeast Asia, the sarus crane population has been in decline. Furthermore, in many areas, a high human population concentration compounds these factors. On the Mekong River, which runs through Cambodia, Vietnam, Laos, Thailand, and China, human population growth and planned development projects threaten the sarus crane. Reports from India, Cambodia, and Thailand have also cited incidences of the trading of adult birds and chicks, as well as hunting and egg stealing in the drop in population of the sarus crane.

Only three subspecies of the sarus crane exist today. One resides in northern India and Nepal, one resides in southeast Asia, and one resides in northern Australia. Their population is about 8,000 in the main Indian population, with recent numbers showing a rapid decline. In Southeast Asia, only 1,000 birds remain.

The situation of the sarus crane in Asia is mirrored by the situation of the wattled crane in Africa. In Africa, the wattled crane is found in the southern and eastern regions, with an isolated population in the mountains of Ethiopia. Current population estimates range between 6,000 to 8,000 and are declining rapidly, due to loss and degradation of wetland habitats, as well as intensified agriculture, dam construction, and industrialization. In other parts of the range, the creation of dams has changed the dynamics of the flood plains, thus further endangering these cranes and their habitats. Human disturbance at or near breeding sites also continues to be a major threat. Lack of oversight and education over the actions of people, industry, and agriculture is leading to reduced preservation for the lands on which cranes live, thereby threatening the ability of cranes to survive in these regions.

If we do not act now, not only will cranes face extinction, but the ecosystems that depend on their contributions will suffer. With the decline of the crane population, the wetlands and marshes they inhabit can potentially be thrown off balance. I urge my colleagues to join me in supporting legislation that can provide funding to the local farming, education and enforcement projects that can have the greatest positive effect on the preservation of both cranes and fragile habitats. This modest investment can secure the future of these exemplary birds and the beautiful areas in which they live. Therefore, I ask my colleagues to support the Crane Conservation Act of 2005.

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

Mr. President, whenever there is a crisis the media has always served to focus the nation's attention on the problem and who has been affected by it. Then it has been up to us, in the Congress, to review the problem and determine whether or not there was anything we could do to ease the suffering and repair the damage to someone's property and their livelihood.

Most of the time, when the media spots a crisis it is of such a magnitude that the pictures we see of the suffering are devastating and powerful. The images clearly cry out to us to take action and do what we can to restore, as much as possible, the lives of these people to normalcy.

We have all seen the pictures of the devastating tornadoes or other natural disasters that have wreaked havoc wherever they have touched. Story after story has appeared in print and on television showing property destroyed, places of business torn in pieces, jobs in jeopardy and lives forever changed by the fury of a few moments of severe weather. Tornadoes don't last a long time, but they leave a path of devastation in their wake that leaves those affected by it forever changed.

Even as we consider the devastation of tornadoes, earthquakes, or other natural disasters, there are those in my state who have seen their livelihoods drastically affected by weather and federal regulation, but they haven't been so visible to us because we haven't seen their faces on the nightly news or read their stories in the national newspapers. That is because not everyone who has seen their livelihood so drastically affected can be portrayed with quite the same kind of powerful images that depict those who have been touched by the ravages of severe weather patterns. Some problems that destroy livelihoods and weaken industries are far more subtle and more difficult to track.

Instead of being destroyed by a single blow, the industry I am referring to is being slowly put to death by the cruelest of methods-- thousands of small cuts brought on by the lethal combination of several years of drought, ambiguous regulations that are too easily taken advantage of and the lax enforcement of existing law which has allowed for the manipulation of the system to one group's advantage.

Right now as I speak to you on the floor of the Senate, if you are a rancher in the West, you have two major problems affecting your ability to earn a living and provide for your family. The first is the continuing drought which has made it so difficult for ranchers to tend their cattle and provide them with good, affordable grazing.

The second is a regulatory nightmare that has held livestock producers captive by the chains of unfair and manipulative contracts. It is this regulatory nightmare that must be addressed, and which brings me to the floor today as I offer legislation to break the chains and require livestock contracts to contain a fixed base price and be traded in open, public markets.

So, what is this regulation that is destroying the health of our family ranchers? It's a practice called ``captive supply,'' a business practice not well known to those outside of the industry, but a practice that has had a tremendous impact on the ranchers of the West.

If you haven't heard about the problem, I must point out that our ranchers have tried to bring it to our attention, but we haven't fully focused on their needs. Whenever I travel to Wyoming, or hold a Town Meeting, or go over the week's mail that I receive from my constituents, I hear the cries for help from our ranchers in Wyoming, and throughout the West. One by one, and without exception, they are all clamoring for attention and relief so they can continue the work that so many in their family have done for so many years.

I could bring a stack of letters to the Floor that come from people all across my State about the problems they face. But, in the interests of time, I will read a small excerpt from one that will give you an idea of how bad things are in the ranching industry as our ranchers try to deal with captive supply.

A letter I received from a rancher in Lingle said that the issue of captive supply needed to be reviewed and addressed because it was ``slowly but surely putting small farmers/feeders out of business.'' He then added, ``until the existing laws are enforced in this area of illegal activities, all other plans or laws will be of very little consequence.''

So what is captive supply--and how is it harming our Nation's ranchers to such an extent? Simply put, captive supply refers to the ownership by meat packers of cattle or the contracts they issue to purchase livestock. It is done to ensure that packers will always have a consistent supply of livestock for their slaughterlines.

The original goal of captive supply makes good business sense. All businesses want to maintain a steady supply of animals to ensure a constant stream of production and control costs.

But captive supply allows packers to go beyond good organization and business performance--to market manipulation--and this is where the problem lies.

The packing industry is highly concentrated. Four companies control approximately 80 percent of U.S. fed cattle slaughter. Using captive supply and the market power of concentration, packers can purposefully drive down the prices by refusing to buy in the open market. This deflates all livestock prices and limits the market access of producers that haven't aligned with specific packers.

We made an attempt to address the problem of captive supply on the Senate floor during the Farm Bill debate, but the amendment to ban packer ownership of livestock more than 14 days before slaughter did not survive the conference committee on the Farm Bill. However, the problems caused by captive supplies are alive and well, just as Wyoming producers have testified to me in the phone calls, letters, faxes and emails I receive from them. Although I supported the packer ban and have cosponsored it again this Congress, I do not think that banning packer ownership of livestock will solve the entire captive supply problem. Packers are using numerous methods beyond direct ownership to control cattle and other livestock.

Currently, packers maintain captive supply through various means including direct ownership, forward contracts, and marketing agreements. The difference between the three is subtle, so let me take a moment to describe how they differ. Direct ownership refers to livestock owned by the packer. In forward contracts, producers agree to the delivery of cattle one week or

more before slaughter with the price determined before slaughter. Forward contracts are typically fixed, meaning the base price is set.

As with forward contracts, marketing agreements also call for the delivery of livestock more than one week before slaughter, but the price is determined at or after slaughter. A formula pricing method is commonly used for cattle sold under marketing agreements. In formula pricing, instead of a fixed base price, an external reference price, such as the average price paid for cattle at a certain packing plant during one week, is used to determine the base price of the cattle. I find this very disturbing because the packer has the ability to manipulate the weekly average at a packing plant by refusing to buy in the open market. Unfortunately, marketing agreements and formula pricing are much more common than forward contracts.

I realize it may be difficult to grasp the seriousness of the situation if you aren't familiar with the cattle market. Most of us haven't signed a contract to sell a load of livestock, but many of us have sold a house. To illustrate the seriousness of the problem, let's explore how you would sell a house using a formula-priced contract in a market structured like the current livestock market.

It is May, and you know you will be selling your home in September. As a wise seller, you want to find a buyer for your home before that time. It turns out that other people don't really buy homes from each other anymore. In fact, four main companies have taken over 80 percent of all real estate transactions. You really have no choice but to deal with one of these companies.

One of them offers you a contract, stating you will receive $10,000 over the average price of what other, similar homes are selling for in your area in September. To manage your risk and ensure a buyer, you have just been practically forced to sign a contract that doesn't specify how much you will receive for your house.

That tingle of fear in the pit of your stomach becomes full-fledged panic when you close the deal in September. You see, the four real estate companies have been planning ahead. They decide to pull away from the market. All the homes selling in September that aren't contracted to the companies flood the market and the price for homes in your area drops $12,000. By trying to manage your risk, you sold your home for $2,000 below average.

As a homeowner, you would be outraged, wouldn't you? You would want to know why anyone had the ability to legally take advantage of you. Livestock producers have the same questions when they lose to the market pressures applied by captive supply. Captive supply gives packers the ability to discriminate against some producers. And those producers pay for it with their bottom line. At the same time, packers use contracts and marketing agreements to give privileged access and premiums to other producers regardless of the quality of their product. These uses of captive supply should be illegal. In fact, they are.

Section 202 of the Packers and Stockyards Act states in (3) (a) and (b):

``It shall be unlawful for any packer with respect to livestock . . . to: (a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or (b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect''

Packers that practice price discrimination toward some producers and provide undue preferences to other producers are clearly in violation of the law. But this law is not being enforced. So what we are left with are unenforced laws or no laws at all to protect the independent producer. Since the Packers and Stockyards Act is not being enforced and the cost of enforcing the law on a case-by-case basis in the courts is expensive and time-consuming, today I propose that the Senate take action.

Most laws require enforcement. They are like speed limits on a country road. No one pays the sign any attention unless the driver is sharing the road with an agent of the law who will enforce it like a police car. This section of the Packers and Stockyards Act is like a sign on the road of commerce that no one is paying attention to because the police are busy doing something else. The bill I am introducing today is not just another sign on the road. It is a speed bump. It doesn't just warn cars to go slower, it makes it much more difficult for them to speed.

My bill does two things to create the speed bump. It requires that livestock producers have a fixed base price in their contracts. It also puts these contracts up for bid in the open market where they belong.

Under this bill, forward contracts and marketing agreements must contain a fixed, base price on the day the contract is signed. This prevents packers from manipulating the base price after the point of sale. You may hear allegations that this bill ends quality-driven production, but it does not prevent adjustments to the base price after slaughter for quality, grade or other factors outside packer control. It prevents packers from changing the base price based on factors that they do control. Contracts that are based on the futures market are also exempted from the bill's requirements.

In an open market, buyers and sellers would have the opportunity to bid against each other for contracts and could witness bids that are made and accepted. Whether they take the opportunity to bid or not is their choice, the key here is that they have access to do so.

My bill also limits the size of contracts to the rough equivalent of a load of livestock, meaning 40 cattle or 30 swine. It doesn't limit the number of contracts that can be offered by an individual. This key portion prevents small and medium-sized livestock producers, like those found in Wyoming, from being shut out of deals that contain thousands of livestock per contract.

Requiring a firm base price and an open and transparent market ends the potential for price discrimination, price manipulation and undue preferences. These are not the only benefits of my bill. It also preserves the very useful risk management tool that contracts provide to livestock producers. Contracts help producers plan and prepare for the future. My bill makes contracts and marketing agreements an even better risk management tool because it solidifies the base price for the producer. Once the agreement is made, a producer can have confidence on shipping day in his ability to feed his family during the next year because he will know in advance how much he can expect to receive for his livestock.

This bill also encourages electronic trading. An open and public market would function much like the stock market, where insider trading is prohibited. The stock market provides a solid example of how electronic livestock trading can work to the benefit of everyone involved. For example, price discovery in an open and electronic market is automatic.

Captive supply is still weighing on the minds and hurting the pocketbooks of ranchers in Wyoming and across the United States. Wyoming ranchers encourage me to keep up the good fight on this issue on every trip I make to my home state. The economic soul of Wyoming is built on the foundation of small towns and small businesses. All livestock producers, even small and medium-sized ones, should have a fair chance to compete in an honest game that allows them to get the best price possible for their product. We must do everything we can to keep our small producers in business.

My bill removes one of the largest obstructions preventing livestock producers from competing formula-priced contracts. I ask my colleagues to assist me in giving their constituents and mine the chance to perform on a level playing field.

Mr. President, whenever there is a crisis the media has always served to focus the nation's attention on the problem and who has been affected by it. Then it has been up to us, in the Congress, to review the problem and determine whether or not there was anything we could do to ease the suffering and repair the damage to someone's property and their livelihood.

Most of the time, when the media spots a crisis it is of such a magnitude that the pictures we see of the suffering are devastating and powerful. The images clearly cry out to us to take action and do what we can to restore, as much as possible, the lives of these people to normalcy.

We have all seen the pictures of the devastating tornadoes or other natural disasters that have wreaked havoc wherever they have touched. Story after story has appeared in print and on television showing property destroyed, places of business torn in pieces, jobs in jeopardy and lives forever changed by the fury of a few moments of severe weather. Tornadoes don't last a long time, but they leave a path of devastation in their wake that leaves those affected by it forever changed.

Even as we consider the devastation of tornadoes, earthquakes, or other natural disasters, there are those in my state who have seen their livelihoods drastically affected by weather and federal regulation, but they haven't been so visible to us because we haven't seen their faces on the nightly news or read their stories in the national newspapers. That is because not everyone who has seen their livelihood so drastically affected can be portrayed with quite the same kind of powerful images that depict those who have been touched by the ravages of severe weather patterns. Some problems that destroy livelihoods and weaken industries are far more subtle and more difficult to track.

Instead of being destroyed by a single blow, the industry I am referring to is being slowly put to death by the cruelest of methods-- thousands of small cuts brought on by the lethal combination of several years of drought, ambiguous regulations that are too easily taken advantage of and the lax enforcement of existing law which has allowed for the manipulation of the system to one group's advantage.

Right now as I speak to you on the floor of the Senate, if you are a rancher in the West, you have two major problems affecting your ability to earn a living and provide for your family. The first is the continuing drought which has made it so difficult for ranchers to tend their cattle and provide them with good, affordable grazing.

The second is a regulatory nightmare that has held livestock producers captive by the chains of unfair and manipulative contracts. It is this regulatory nightmare that must be addressed, and which brings me to the floor today as I offer legislation to break the chains and require livestock contracts to contain a fixed base price and be traded in open, public markets.

So, what is this regulation that is destroying the health of our family ranchers? It's a practice called ``captive supply,'' a business practice not well known to those outside of the industry, but a practice that has had a tremendous impact on the ranchers of the West.

If you haven't heard about the problem, I must point out that our ranchers have tried to bring it to our attention, but we haven't fully focused on their needs. Whenever I travel to Wyoming, or hold a Town Meeting, or go over the week's mail that I receive from my constituents, I hear the cries for help from our ranchers in Wyoming, and throughout the West. One by one, and without exception, they are all clamoring for attention and relief so they can continue the work that so many in their family have done for so many years.

I could bring a stack of letters to the Floor that come from people all across my State about the problems they face. But, in the interests of time, I will read a small excerpt from one that will give you an idea of how bad things are in the ranching industry as our ranchers try to deal with captive supply.

A letter I received from a rancher in Lingle said that the issue of captive supply needed to be reviewed and addressed because it was ``slowly but surely putting small farmers/feeders out of business.'' He then added, ``until the existing laws are enforced in this area of illegal activities, all other plans or laws will be of very little consequence.''

So what is captive supply--and how is it harming our Nation's ranchers to such an extent? Simply put, captive supply refers to the ownership by meat packers of cattle or the contracts they issue to purchase livestock. It is done to ensure that packers will always have a consistent supply of livestock for their slaughterlines.

The original goal of captive supply makes good business sense. All businesses want to maintain a steady supply of animals to ensure a constant stream of production and control costs.

But captive supply allows packers to go beyond good organization and business performance--to market manipulation--and this is where the problem lies.

The packing industry is highly concentrated. Four companies control approximately 80 percent of U.S. fed cattle slaughter. Using captive supply and the market power of concentration, packers can purposefully drive down the prices by refusing to buy in the open market. This deflates all livestock prices and limits the market access of producers that haven't aligned with specific packers.

We made an attempt to address the problem of captive supply on the Senate floor during the Farm Bill debate, but the amendment to ban packer ownership of livestock more than 14 days before slaughter did not survive the conference committee on the Farm Bill. However, the problems caused by captive supplies are alive and well, just as Wyoming producers have testified to me in the phone calls, letters, faxes and emails I receive from them. Although I supported the packer ban and have cosponsored it again this Congress, I do not think that banning packer ownership of livestock will solve the entire captive supply problem. Packers are using numerous methods beyond direct ownership to control cattle and other livestock.

Currently, packers maintain captive supply through various means including direct ownership, forward contracts, and marketing agreements. The difference between the three is subtle, so let me take a moment to describe how they differ. Direct ownership refers to livestock owned by the packer. In forward contracts, producers agree to the delivery of cattle one week or

more before slaughter with the price determined before slaughter. Forward contracts are typically fixed, meaning the base price is set.

As with forward contracts, marketing agreements also call for the delivery of livestock more than one week before slaughter, but the price is determined at or after slaughter. A formula pricing method is commonly used for cattle sold under marketing agreements. In formula pricing, instead of a fixed base price, an external reference price, such as the average price paid for cattle at a certain packing plant during one week, is used to determine the base price of the cattle. I find this very disturbing because the packer has the ability to manipulate the weekly average at a packing plant by refusing to buy in the open market. Unfortunately, marketing agreements and formula pricing are much more common than forward contracts.

I realize it may be difficult to grasp the seriousness of the situation if you aren't familiar with the cattle market. Most of us haven't signed a contract to sell a load of livestock, but many of us have sold a house. To illustrate the seriousness of the problem, let's explore how you would sell a house using a formula-priced contract in a market structured like the current livestock market.

It is May, and you know you will be selling your home in September. As a wise seller, you want to find a buyer for your home before that time. It turns out that other people don't really buy homes from each other anymore. In fact, four main companies have taken over 80 percent of all real estate transactions. You really have no choice but to deal with one of these companies.

One of them offers you a contract, stating you will receive $10,000 over the average price of what other, similar homes are selling for in your area in September. To manage your risk and ensure a buyer, you have just been practically forced to sign a contract that doesn't specify how much you will receive for your house.

That tingle of fear in the pit of your stomach becomes full-fledged panic when you close the deal in September. You see, the four real estate companies have been planning ahead. They decide to pull away from the market. All the homes selling in September that aren't contracted to the companies flood the market and the price for homes in your area drops $12,000. By trying to manage your risk, you sold your home for $2,000 below average.

As a homeowner, you would be outraged, wouldn't you? You would want to know why anyone had the ability to legally take advantage of you. Livestock producers have the same questions when they lose to the market pressures applied by captive supply. Captive supply gives packers the ability to discriminate against some producers. And those producers pay for it with their bottom line. At the same time, packers use contracts and marketing agreements to give privileged access and premiums to other producers regardless of the quality of their product. These uses of captive supply should be illegal. In fact, they are.

Section 202 of the Packers and Stockyards Act states in (3) (a) and (b):

``It shall be unlawful for any packer with respect to livestock . . . to: (a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or (b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect''

Packers that practice price discrimination toward some producers and provide undue preferences to other producers are clearly in violation of the law. But this law is not being enforced. So what we are left with are unenforced laws or no laws at all to protect the independent producer. Since the Packers and Stockyards Act is not being enforced and the cost of enforcing the law on a case-by-case basis in the courts is expensive and time-consuming, today I propose that the Senate take action.

Most laws require enforcement. They are like speed limits on a country road. No one pays the sign any attention unless the driver is sharing the road with an agent of the law who will enforce it like a police car. This section of the Packers and Stockyards Act is like a sign on the road of commerce that no one is paying attention to because the police are busy doing something else. The bill I am introducing today is not just another sign on the road. It is a speed bump. It doesn't just warn cars to go slower, it makes it much more difficult for them to speed.

My bill does two things to create the speed bump. It requires that livestock producers have a fixed base price in their contracts. It also puts these contracts up for bid in the open market where they belong.

Under this bill, forward contracts and marketing agreements must contain a fixed, base price on the day the contract is signed. This prevents packers from manipulating the base price after the point of sale. You may hear allegations that this bill ends quality-driven production, but it does not prevent adjustments to the base price after slaughter for quality, grade or other factors outside packer control. It prevents packers from changing the base price based on factors that they do control. Contracts that are based on the futures market are also exempted from the bill's requirements.

In an open market, buyers and sellers would have the opportunity to bid against each other for contracts and could witness bids that are made and accepted. Whether they take the opportunity to bid or not is their choice, the key here is that they have access to do so.

My bill also limits the size of contracts to the rough equivalent of a load of livestock, meaning 40 cattle or 30 swine. It doesn't limit the number of contracts that can be offered by an individual. This key portion prevents small and medium-sized livestock producers, like those found in Wyoming, from being shut out of deals that contain thousands of livestock per contract.

Requiring a firm base price and an open and transparent market ends the potential for price discrimination, price manipulation and undue preferences. These are not the only benefits of my bill. It also preserves the very useful risk management tool that contracts provide to livestock producers. Contracts help producers plan and prepare for the future. My bill makes contracts and marketing agreements an even better risk management tool because it solidifies the base price for the producer. Once the agreement is made, a producer can have confidence on shipping day in his ability to feed his family during the next year because he will know in advance how much he can expect to receive for his livestock.

This bill also encourages electronic trading. An open and public market would function much like the stock market, where insider trading is prohibited. The stock market provides a solid example of how electronic livestock trading can work to the benefit of everyone involved. For example, price discovery in an open and electronic market is automatic.

Captive supply is still weighing on the minds and hurting the pocketbooks of ranchers in Wyoming and across the United States. Wyoming ranchers encourage me to keep up the good fight on this issue on every trip I make to my home state. The economic soul of Wyoming is built on the foundation of small towns and small businesses. All livestock producers, even small and medium-sized ones, should have a fair chance to compete in an honest game that allows them to get the best price possible for their product. We must do everything we can to keep our small producers in business.

My bill removes one of the largest obstructions preventing livestock producers from competing formula-priced contracts. I ask my colleagues to assist me in giving their constituents and mine the chance to perform on a level playing field.

Mr. President, I rise today to introduce the CLEAR ACT, the Clean Efficient Automobiles Resulting from Advanced Car Technologies Act of 2005. This bill passed the Senate as part of the omnibus energy bill last year, but unfortunately was not enacted.

Let me begin by thanking those who are cosponsoring this bill, namely Senators Rockefeller, Ensign, Chafee, Collins, Snowe, Jeffords, Lieberman and Smith. And I know that a number of other senators will add their names to this legislation in the near future. I appreciate their previous support and look forward to working with them to promote the CLEAR ACT in this Congress.

The CLEAR ACT addresses two issues of critical national importance: our dependence on foreign oil; and air pollution. Ultimately, two- thirds of our oil use is consumed by the transportation sector, and transportation in the United States is 97 percent dependent on oil. If we are going to address our energy crisis, we have to address our transportation fuels and vehicle use in a serious way.

I was very pleased that President Bush, yesterday, highlighted the need to direct the automotive marketplace toward the widespread use of hybrid

and alternative fuel vehicles. The CLEAR ACT provides powerful market incentives to achieve that goal. It promotes the combination of advances we must have in technology, infrastructure, and alternative fuels in order to bring fuel cell vehicles to a future mass market reality. Even if, in the end, hydrogen fuel cell vehicles prove infeasible, the battery electric and alternative fuel technologies promoted by this bill will play a major role in improving our energy security and our air quality. And we do so without any new federal mandates.

Currently, consumers face three basic obstacles to accepting the use of these alternative fueled and advanced technology vehicles. They are the cost of the alternative fuel, the lack of an adequate infrastructure of alternative fueling stations, and the incremental cost of alternative fuel vehicles. The CLEAR ACT attacks each of these obstacles head on, and it is crafted in a way to encourage the greatest social benefit possible for every tax dollar spent.

We need to find a way to lower those barriers to widespread consumer acceptance, which will in turn put the power of mass production to work to lower the incremental cost of these alternative technologies.

In short, our legislation would bring the benefits of cleaner air and energy independence to our citizens sooner.

I have heard one or two senators ask why we need incentives to purchase hybrid vehicles when people are lining up to buy them today. It is true that demand for these vehicles is high in a few areas. However, these high-demand areas tend to have local or state incentives in place for the purchase of the vehicles. Where incentives are not in place, hybrid sales are minimal. This demonstrates that incentives can indeed provide a market breakthrough to consumer acceptance of alternatives vehicles. With the CLEAR ACT we are trying to provide that breakthrough on a national scale.

In 2004, hybrid vehicles made up only 0.48 percent of light weight vehicle sales. That's far short of where we need to be as a nation to make a dent in our energy crisis, but at least it's a start.

Air pollution is an issue of critical concern in my home State of Utah. While Utah has made important strides in improving air quality, it is a fact that each year we increase the number of vehicular miles driven in our State and mobile sources are the main cause of air pollution in Utah.

It is clear that if we are to have cleaner air, we must encourage the use of alternative fuels and technologies to reduce vehicle emissions.

The CLEAR ACT will help us do just that.

I am very proud to offer this ground-breaking and bipartisan legislation.

It represents the input and hard work of a very powerful and effective coalition--the CLEAR ACT Coalition. This coalition includes the Union of Concerned Scientists, the Natural Resource Defense Council, Environmental Defense, the Alliance to save Energy, Ford Motor Company, Toyota, Honda, the Natural Gas Vehicle Coalition, the Propane Vehicle Council, the Methanol Institute, the Electric Drive Transportation Association, and others. The CLEAR ACT reflects the untiring effort and expertise of the members of this coalition, and for this we owe them our gratitude.

I urge my colleagues in the Senate to join us in this forward-looking approach to cleaner air and increased energy independence.

Mr. President, more than 3 years ago, our country suffered the most deadly attack ever on our soil. We woke up on the morning of September 11, 2001 to a new reality.

A month later, we again realized the magnitude of the ever-changing threat we were facing when the Senate Hart Office Building was contaminated with anthrax and was closed for three months.

Most Americans were shaken out of their sense of complacency in 2001.

As many will recall, after 9/11, Congress took action to secure our borders, our ports, and our airlines and bolster our public health infrastructure.

Yet, it is important to note that the key steps necessary to protect our country against the continuing threat of bioterrorism are still being carefully reviewed and revised.

And while these steps are being evaluated, time is running out. Even yesterday, we heard news reports that al-Qaida is planning attacks on our country through chemical plants within the next five years.

While Congress took an important step when the Project BioShield Act of 2004 was signed into law last July, I believe that much more still needs to be done.

That is why I am once again joining my good friend and colleague, Senator Joe Lieberman, in introducing this bipartisan bill. I am proud to have been Senator Lieberman's primary partner on this legislation over the past several years.

Indeed, we are pleased that some key concepts contained in our earlier bills, such as the guaranteed market, have been adopted by the administration and our colleagues in Congress.

In the last congress, the Senate Judiciary Committee held a joint hearing with the Senate Health, Education, Labor and Pension Committee to determine what priorities should be included in the follow-on legislation, the Bioshield II bill, and to raise awareness on what else needs to be done in order to combat bioterrorism. It is clear that we do need to continue our efforts, and that is why I will continue to push for action on this legislation until the bill is signed into law by the President.

It is well known that terrorists are specifically interested in using biological weapons, such as those produced in the Soviet Union before its collapse.

Some experts believe that Soviet scientists were able to develop smallpox strains that were universally lethal.

Some believe they developed a strain of Black Plague that is resistant to 10 different antibiotics.

Today, it is unclear where some of these former Soviet scientists are working and, even more disturbing, it is not clear if these bioterror agents are still in the former Soviet Union.

As new varieties of biological weapons are developed, the threat of another attack becomes a very real possibility. Again, that is why Senator Lieberman and I strongly believe that Congress needs to act on the Liberman-Hatch legislation immediately.

Over 4 years ago, Congress instructed the executive branch to perform a bioterrorism exercise to determine our Nation's state of preparedness against a bioterror threat.

In May 2000, a bioterrorism exercise was initiated and the naturally occurring plague bacterium, Yersinia Pestis, was theoretically unleashed in Denver. In that exercise, one antibiotic that is available to the public was used to combat the bioterrorism plot and treat the infected individuals.

I believe that this exercise needs to be conducted again--a more realistic scenario would be one in which no effective treatment is available.

To me, that is the more realistic and threatening scenario.

There are already numerous diseases where no actual cure exists, where all the clinicians can do is to support the patient and hope that they survive. We need to focus our efforts on improving our ability to care for these illnesses, as they are currently very attractive weapons to our enemies.

Even as we continue to invest resources to build up a prepared public health infrastructure, we must also develop medicines to threat those who

are exposed or infected. Otherwise, we will be forced to impose quarantines, just as our ancestors did in times of pestilence, and we will surely find it as difficult a proposition as they did. Quarantining hundreds, maybe even hundreds of thousands of people would, obviously, be extremely difficult to manage.

Developing ways to prevent, detect, and treat dangerous pathogens must be a priority for our Nation so that we do not face these dreadful scenarios.

Our best defense against bioterrorism is a full medicine chest. We must develop medicines to treat the naturally occurring biologic agents, and, in addition, we need to develop medicines to treat bacteria and viruses that have been genetically manipulated as weapons to cause death or injury to human beings.

Therefore, the biopharma companies must be engaged in these discussions because they will play an integral role.

Our bill, BioShield II, is the next step in the legislative process to ensure bioterror readiness.

We cannot afford to wait. Every day that we sit idle, we encourage our enemies to move forward.

We must abandon business-as-usual and take vigorous steps to protect our Nation, our communities, our citizens and our industries from future bioterrorist attack, especially given the implication of further attacks on the United States.

BioShield II encourages Congress to take vital steps to protect our Nation through an array of intellectual property, tax, procurement, research, liability, and other incentives to ensure the creation of a robust biodefense industry.

Direct government funding can only go so far.

To be effective, we must also enact incentives so that potential investors will want to fund the research associated with building a strong and flexible defense against potential attacks.

But to accomplish this goal, we must unleash the creative genius of the biopharma industry to work with us on these solutions.

Bioshield II will encourage biopharma companies to take the lead in the development of vaccines, therapeutics and diagnostics to combat bioterrorism. These efforts will also help protect our Nation against naturally occurring diseases. In fact, a major improvement in this bill is that we allow the array of incentives to be employed against infectious diseases and as well as disease prevalent in the developing world.

All research on infectious disease is interrelated. SARS, HIV, malaria, and avian and pandemic flue are chilling reminders that our public health system must be able to take on all comers; it is not just deliberately engineered agents that threaten us.

Our infrastructure--our researchers, our pharmaceutical industry, our hospitals, and our caregivers--must be prepared and equipped to fight illness, wherever and however it occurs. By expanding the scope of covered research under this bill, we may also discover cures for diseases that afflict the world's poorest nations.

The goal of our legislation is to have a safer and better prepared America. But, to do this we must provide researchers and investors with the proper incentives. Forming unprecedented and vigorous partnerships with these companies is the key. Otherwise, this endeavor will never work and the American public will remain at great risk.

The harsh reality is that nearly 4 years after 9/11, we have not developed one significant bioterrorism countermeasure.

Aside from vaccines for smallpox and anthrax--both of which have their own downsides--and a handful of antibiotics and anti-infectives-- also with their own array of strengths and weaknesses--the cupboard is bare.

This is simply not acceptable.

As new varieties of bioterror weapons are developed, the threat of another attack comes ever-closer to our shores. For this reason, Senator Lieberman and I are introducing the ``Project BioShield II Act of 2005''.

We plan to work closely with all interested members of Congress, including Senator Burr, Senators Enzi and Kennedy, chairman and ranking Democratic member of the HELP Committee respectively, Senators Grassley and Baucus, chairman and ranking Democratic member of the Finance Committee, Senators Specter and Leahy, chairman and ranking Democratic member of the Judiciary Committee; and Senator Collins, chairman of the Senate Homeland Security and Governmental Affairs Committee.

We will work closely with all the relevant officials in the Bush administration; and we will work with Senate Leadership and with all interested parties in the House.

I urge my colleagues to join me in supporting this very important legislation.