Frequently Asked Questions

  1. Who can apply for loan?

Any researcher and/or company that has received FDA authorization to launch a clinical trial (i.e., has a cleared IND) for their emerging therapy can apply. The recipient must also demonstrate the ability to pay back the loan. The maximum loan amount for an individual recipient is $25 million.

  1. What happens if the project fails and/or the researcher and/or company doesn’t pay back the loan?

The loan recipient is obligated to pay back the loan regardless of the project’s success. If the recipient doesn’t pay back the loan, they will be required to surrender their intellectual property or other collateral. A federal guarantee will be implemented to protect BioBond investors.

  1. Who will purchase the BioBonds?

BioBonds are targeted for long-term, low-risk investors such as pension funds and insurance companies. 

  1. What will the impact of this legislation be on the budget and national debt?

HR 3437 will have minimal impact on the budget because the loans must be paid back by the recipients. 

  1. Who are the co-sponsors for HR 3437?

A list of the bill’s co-sponsors can be seen on this page.

  1. Don’t pharmaceutical companies normally fund clinical trials?

Most pharmaceutical companies, biotechnology companies and venture capital firms don’t fund early-stage clinical research. They prefer to fund projects that have shown some efficacy in early-stage clinical trials. The loans are intended to help researchers launch early-stage clinical research so they can attract commercial funding for a later-stage trial.

  1. Who will oversee the BioBonds program?

The US Treasury and Department of Health and Human Services will provide oversight for the BioBonds program.

  1. How would the FDA’s budget be impacted by the legislation’s enactment?

There would be no impact on FDA’s budget were the legislation enacted into law.  All costs associated with the BioBonds program are separately appropriated and/or paid by the bond issuer, with these costs then recovered via bond sales, fees, etc. No guarantee will be issued without an initial, specific appropriation/contribution for the costs of the guarantee.

  1. How will BioBond issuers be selected?

HHS, in consultation with and relying on the expertise of Treasury, will issue regulations establishing the criteria under which issuers may be selected.  These regulations will also require issuers to issue and underwrite bonds in a way that both promotes the success of the program and protects the U.S. (i.e., taxpayers), potential BioBond investors, and the long-term promotion of biomedical clinical trials.