What are Eye Bonds?

Eye Bonds are financial instruments to raise money for research specifically related to eye diseases. Eye Bonds may be purchased by pension funds, insurance companies, and other institutional investors. The money generated will then be lent to scientific projects selected by the National Institutes of Health. When the bond matures, or comes due, the scientific project will have reached a stage of development that it will have commercial value or be eligible for other funding, allowing it to repay the Eye Bond. Eye Bonds will be backed by a limited federal guarantee to provide the security needed to allow pension funds and other private investors to purchase them.

What are the benefits of Eye Bonds?

Eye Bonds provide the opportunity to accelerate development of promising treatments and make them available to the people who need them. Taxpayers already fund basic scientific research through taxpayer funding of the National Institutes of Health and the many grants they distribute. However, it is very difficult for this initial research to make it to actual cures and treatments developed by companies. Most other first-world countries directly support translational research, but not in the U.S. Eye Bonds create a public-private partnership that will fund the scientific study, speed the availability of important therapies, and decrease the amount of time patients and their families must suffer. Eye Bonds is a pilot program. If it succeeds, this model could be used to advance translational research for other conditions and diseases as well.

Why Eye Bonds?

Many promising therapies never make it through the translational research process — out of labs and into clinical trials — because of a lack of funding; translational research is often referred to as “crossing the Valley of Death” for this reason. Pharmaceutical and biotechnology companies are less likely to fund translational research. They prefer to fund projects once they have demonstrated some initial success in a clinical trial. This is even more true with therapies for rare diseases or conditions without a substantial commercial market. Traditionally, only venture capital investors have funded translational projects, and they demand a high interest rate and a short-term return. Eye Bonds would enable lower risk investors to enter this space, providing more affordable funding for this important scientific research. The end goal is to advance treatments for eye diseases and increase American competitiveness in the critical biotechnology sector with only very limited taxpayer risk.

What is the U.S. government’s role in Eye Bonds?

Eye Bonds will have a limited federal guarantee. This means that if the company cannot pay back the loan, the U.S. government will have a responsibility to make sure the investors are repaid 50% of the value of the bond. This guarantee is very important because it makes Eye Bonds safe enough for pension funds and insurance companies, who have specific fiduciary duties, to be allowed to purchase them. However, Eye Bonds have been carefully designed to present very limited risk to U.S. taxpayers. First, any company that borrows Eye Bond funds is required to either repay them when due or sell their assets, including their intellectual property. Second, recipients of loans from Eye Bonds must repay these loans first, prior to other investors. Third, funds raised by selling bonds and not yet lent to a scientific project will be kept by the U.S. Treasury, earning interest income for the government. Fourth, every dollar repaid goes first to reduce the U.S. government guarantee and then to the purchaser of the Eye Bond. The only cost to the U.S. government is to support NIH advisory committees or staff time to select eligible projects, and this cost will also be repaid immediately from the proceeds when bonds are issued.

Read more about public funding efforts for translational biomedical research in other advanced, market-based economies.

Which diseases and conditions will be impacted?

Eye Bonds will help research for all eye diseases, as well as whole eye transplants. Bonds could provide funding for exciting therapies such as: eye transplants to restore vision for veterans blinded in battle, preventions and/or cures for age-related macular degeneration and other inherited retinal diseases, therapies for eye diseases related to diabetes, glaucoma and more. In short, it will hold out hope for the vision for millions of Americans.

Who will decide which projects will be funded?

The National Eye Institute, a division of the National Institutes of Health, would select and manage the diverse research portfolio.

Who will purchase Eye Bonds?

Eye Bonds will be long-term investments for insurance companies, pension funds, and other institutional investors. Eye Bonds will be lower risk investments because bondholders will be paid off before other investors.

What needs to happen for Eye Bonds to become available?

Eye Bonds are the major provision of the Faster Treatments and Cures for Eye Diseases Act. Like all legislation, this Act needs to be voted on in the U.S. House of Representatives and the Senate. If it passes in the House and Senate, then it is brought to the president for signature. The Faster Treatments and Cures for Eye Diseases Act could be voted on separately, or it could be wrapped into the federal budget or another resolution.

Where is Eye Bonds in the legislative process now?

The Faster Treatments and Cures for Eye Diseases Act was introduced in the U.S. House of Representatives on May 9, 2019. If enacted, the bill could result in up to $1 billion ($250 million annually) available for Eye Bonds. It is difficult to say when Eye Bonds will be brought up for a vote, but the introduction of the bill is an important first step!

Who are the Congressional cosponsors for Eye Bonds (Bill number HR 2620)?

Eye Bonds has bipartisan support in the House.

I want to contact my congressperson about Eye Bonds, but I don’t know who he or she is. How do I figure that out?

Visit https://www.house.gov/representatives/find-your-representative to find your representative. All you need is your zip code to do the search.

Where did the idea for Eye Bonds come from?

Eye Bonds are the vision, and the result of many years of hard work, of Karen and Basil Petrou. Karen is a long-time board director for the Foundation Fighting Blindness (FFB) and the Petrous are the co-founders and partners of the financial policy think-tank: Federal Financial Analytics.

How is Foundation Fighting Blindness involved in Eye Bonds?

FFB has been a driving force in helping this legislation get introduced. FFB Communications and Science departments are working with several outside groups to raise awareness of, and build support for, the legislation. FFB is telling their constituents about Eye Bonds and asking them to contact their U.S. House of Representative member expressing support for the Eye Bonds legislation.