WASHINGTON - Lawmakers, pharmaceutical and health care industry representatives met on Capitol Hill Wednesday to discuss BioShield II, a follow up to the original BioShield project signed by President George Bush in July.

The first Project BioShield is a 10-year, $5.6 billion program designed to expand public- and private-sector research incentives to develop treatments, antidotes and vaccines that might not otherwise find a viable commercial market. It also allows the government to distribute certain treatments to the public before their approval by the FDA.

The legislation - S. 666, on which BioShield II and parts of the original BioShield are based - was introduced in March 2003 by Sens. Joseph Lieberman (D-Conn.) and Orrin Hatch (R-Utah). Wednesday's hearing - a joint meeting of the Senate's Judiciary Committee and Health, Education, Labor and Pensions Committee - was intended to get comment from industry and health care professionals on possible changes to the proposed update, in addition to comments from other senators.

The hearing was interrupted frequently and then cut short as senators moved in and out to participate in floor debate on the Intelligence Reform Bill.

Hatch, chairman of the Judiciary Committee, said BioShield I was a good start, but that given the growing risks of potential bioterrorism attacks in the U.S., the senate should abandon "business as usual and take the vigorous steps that will be advocated through the BioShield II legislation." He also said the legislation would be introduced next year in the 109th Congress.

"We simply cannot afford to wait," Hatch said. "Considering the anthrax attacks of 2001 and the ricin attack in our nation's capitol in February of this year, we already have ample reason to believe that the July law, while an important first step, is not sufficient and that we need to enact a more comprehensive legislative strategy."

According to a statement released by Lieberman, the goal of BioShield II is to shift the risk of bioterror countermeasure research and development to industry, in response to industry skepticism about the reliability of partnering with the federal government.

"Engaging the industry as entrepreneurs, rather than 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," he said. Lieberman was slated to address the hearing but was unable to attend. "Our goal with BioShield II should be to engage the successful biopharma companies in this research - companies that have brought products to market - and persuade them that the government will be a reliable partner."

BioShield was enacted to provide a predictable and guaranteed government market for vaccines and other medical countermeasures that otherwise would not have a consumer outlet. Lieberman and Hatch said BioShield II, as written, would include tax incentives to develop capital for biopharmaceutical companies to conduct research into bioterror countermeasures, protect and enhance intellectual property, and address other issues that address companies' inclinations to conduct research.

The updated legislation would make a company looking for research funding eligible to elect from three tax incentives: establishing an R&D limited partnership, issuance of a special class of stock, which would entitle the investors to zero capital gains, or a special tax credit to fund the research.

The first two provisions are intended to help smaller biotech companies gain capital for research. Such companies would be unable to use tax credits because they have no revenue from product sales and no income tax liability with which to claim a tax credit.

BioShield II also would provide that if a company develops a bioterror countermeasure, that it would be eligible for one of two patent incentives.

The first incentive would make the company eligible to receive a patent for its invention with a term as long as the term of the patent from the U.S. Patent Office and without any time penalties due to delays in the FDA-approval process.

The second incentive outlined in the proposed legislation would make a company eligible to extend the term of any patent for two years. Called the "wild-card provision" of S. 666, it is available only to companies with $750 million or less in paid-in capital. The company also would be eligible for a 10-year period of market exclusivity.

The legislation also would provide protection against liability for the company that develops a product.

Hatch also said he hoped for incentives for infectious disease research in general. "In my opinion, all research on infectious disease is interrelated, so we might strengthen bioterror research if the research focus is broader than just bioterror pathogens."

The wild-card provision drew the most criticism.

"I have serious concerns about the wide-ranging consequences of this bill, and it strikes me as giving everything but the kitchen sink away to the brand pharmaceutical industry," said Patrick Leahy (D-Vt.). "The definition of countermeasure under S. 666 is so broad as to likely affect the patent life and terms of market exclusivity on virtually all current and new pharmaceutical products, not just those identified by the secretary of Health and Human Services to be essential for the protection of the American public."

He also said the legislation seemed to expand provisions to provide the pharmaceutical industry "immunity from liability."

Industry has argued that it is not properly protected under current law against lawsuits resulting from products developed quickly in a bioterror drug pipeline.

Sen. Charles Schumer (D-N.Y.) was the most critical of the wild-card provision, saying that he would vote to strike down the entire bill if the provision remained. "This is an important homeland security issue," Schumer said. "Who are we kidding? This is not how to help biological research. This is intended to help pharmaceutical companies."

Schumer said billions of dollars would be given to drug companies for no guaranteed return. "If you add up a one-year extension for the nine top drugs on the market, it would add up to an additional $31 billion for pharmaceutical companies. That is more than the entire NIH budget. This is Washington at its worst, and I am infuriated by this."