[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2132 Introduced in Senate (IS)]
106th CONGRESS
2d Session
S. 2132
To create incentives for private sector research related to developing
vaccines against widespread diseases and ensure that such vaccines are
affordable and widely distributed.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 1, 2000
Mr. Kerry (for himself, Mr. Frist, and Mrs. Murray) introduced the
following bill; which was read twice and referred to the Committee on
Foreign Relations
_______________________________________________________________________
A BILL
To create incentives for private sector research related to developing
vaccines against widespread diseases and ensure that such vaccines are
affordable and widely distributed.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Vaccines for the New Millennium Act
of 2000''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Vaccines are among the most cost-effective weapons in
the arsenal of modern medicine to stop the spread of contagious
diseases and strengthen an individual's immune system to resist
a wide range of infectious diseases, and vaccines offer a
relatively inexpensive means of lowering a society's overall
cost of medical care.
(2) Every year, up to 3,000,000 children's lives are saved
as the result of early childhood immunizations. But almost
3,000,000 more lives worldwide are lost from diseases that
could be prevented with existing vaccines.
(3) Today, 1 in 4 children do not receive the 6 basic
vaccinations: polio, diptheria, whooping cough, tetanus,
measles, and tuberculosis. The proportion of children immunized
against these 6 diseases has declined in recent years, from
approximately 80 percent in 1990 to 74 percent in 1998.
(4) Safe, effective, and universal immunization is a means
to end the tragedy of avoidable childhood deaths, and a means
to improve the overall health, productivity, and security of
society.
(5) As well as the challenges of increasing access to
existing vaccines, there are additional challenges for research
and development of new vaccines. Over 5,000,000 people die
annually from HIV, tuberculosis, and malaria. Vaccines against
these infectious diseases are urgently needed.
(6) The spread of HIV is a human tragedy that is reversing
previous gains in life expectancy and exacerbating poverty in
developing countries. Over 33,000,000 people are infected with
HIV, and the disease will kill more than 2,500,000 people this
year. More than 11,000,000 children worldwide have been
orphaned by AIDS and 16,000 people become newly infected every
day.
(7) While an estimated $2,000,000,000 is spent annually on
research for AIDS treatment, much of it by the private sector,
the total global research and development for preventive HIV
vaccines is substantially less, perhaps as little as
$300,000,000, and of the amount spent on lifesaving vaccine
research, only a fraction is financed by private sector drug
manufacturers.
(8) Between 7,000,000 and 8,000,000 individuals develop
active tuberculosis every year and 2,000,000 to 3,000,000
individuals die from tuberculosis each year, with tuberculosis
accounting for more than \1/4\ of all preventable adult deaths
in developing countries. An individual is newly infected with
tuberculosis every second, and someone dies of tuberculosis
every 10 seconds.
(9) Each year, 300,000,000 to 500,000,000 individuals
become ill with malaria, and approximately 1,000,000
individuals die from the disease, exacting an enormous toll in
lives, medical costs, and lost productivity. The majority of
those who die from malaria are children under the age of 5. One
person dies from malaria every 30 seconds.
(10) While additional public funds for basic research are
critical in the effort to find vaccines for HIV, malaria, and
tuberculosis, equally important is a concerted effort by
private sector drug manufacturers to find vaccines for these 3
major infectious diseases.
(11) Additional, targeted public subsidies for private
sector lifesaving vaccine research and development are
justified on the basis that achieving effective and affordable
vaccines for HIV, malaria, and tuberculosis will yield public
benefits beyond those benefits captured by the manufacturer.
SEC. 3. UNIVERSAL EARLY CHILDHOOD IMMUNIZATIONS.
Section 104(c)(3) of the Foreign Assistance Act of 1961 (22 U.S.C.
2151b(c)(3)) is amended in the fourth sentence by striking ``the
protection of'' and all that follows through ``1991'' and inserting
``the universal protection of all children from immunizable diseases by
December 31, 2009''.
SEC. 4. VOLUNTARY CONTRIBUTION TO GLOBAL ALLIANCE FOR VACCINES AND
IMMUNIZATIONS AND INTERNATIONAL AIDS VACCINE INITIATIVE.
(a) Authorization of Appropriations.--Section 302 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2222) is amended by adding at the end
the following:
``(j) In addition to amounts otherwise available under this
section, there are authorized to be appropriated to the President for
fiscal year 2001 an amount not in excess of $50,000,000 and for fiscal
year 2002 an amount not in excess of $100,000,000 to be available only
for United States contributions to the Global Alliance for Vaccines and
Immunizations.
``(k) In addition to amounts otherwise available under this
section, there are authorized to be appropriated to the President for
fiscal year 2001 $10,000,000 and for fiscal year 2002 $20,000,000 to be
available only for United States contributions to the International
AIDS Vaccine Initiative.''.
(b) Report.--The President shall include in the July 1 report
submitted to Congress under section 305(b)(1) of the Foreign Assistance
Act of 1961 (22 U.S.C. 2226(b)(1)) for fiscal years 2001 and 2002 a
report on the effectiveness of the Global Alliance for Vaccines and
Immunizations in meeting the goals of--
(1) improving access to sustainable immunization services;
(2) expanding the use of all existing, safe, and cost-
effective vaccines where they address a public health problem;
(3) accelerating the development and introduction of new
vaccines and technologies;
(4) accelerating research and development efforts for
vaccines needed primarily in developing countries; and
(5) making immunization coverage a centerpiece in
international development efforts.
SEC. 5. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING VACCINES
AGAINST WIDESPREAD DISEASES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45D. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING VACCINES
AGAINST WIDESPREAD DISEASES.
``(a) General Rule.--For purposes of section 38, the vaccine
research credit determined under this section for the taxable year is
an amount equal to 50 percent of the excess (if any) of--
``(1) the qualified vaccine research expenses for the
taxable year, over
``(2) the base amount.
``(b) Qualified Vaccine Research Expenses.--For purposes of this
section--
``(1) Qualified vaccine research expenses.--
``(A) In general.--Except as otherwise provided in
this paragraph, the term `qualified vaccine research
expenses' means the amounts which are paid or incurred
by the taxpayer during the taxable year which would be
described in subsection (b) of section 41 if such
subsection were applied with the modifications set
forth in subparagraph (B).
``(B) Modifications.--For purposes of subparagraph
(A), subsection (b) of section 41 shall be applied--
``(i) by substituting `vaccine research'
for `qualified research' each place it appears
in paragraphs (2) and (3) of such subsection,
and
``(ii) by substituting `75 percent' for `65
percent' in paragraph (3)(A) of such
subsection.
``(C) Exclusion for amounts funded by grants,
etc.--The term `qualified vaccine research expenses'
shall not include any amount to the extent such amount
is funded by any grant, contract, or otherwise by
another person (or any governmental entity).
``(2) Vaccine research.--
``(A) In general.--The term `vaccine research'
means research to develop vaccines and microbicides
for--
``(i) malaria,
``(ii) tuberculosis,
``(iii) HIV, or
``(iv) any infectious disease (of a single
etiology) that is determined by the Secretary
of Health and Human Services (after
consultation with the Director of the Center
for Disease Control and Prevention and the
Administrator of the United States Agency for
International Development) to cause the deaths
of over 1,000,000 people worldwide each year.
``(B) Microbicide.--The term `microbicide' means a
substance used topically for prevention from infection
by an identified pathogen.
``(C) Vaccine.--The term `vaccine' means a product
using all or portions of the disease-causing organism
or nucleic acid sequences for prevention from infection
by an identified pathogen.
``(c) Base Amount.--For purposes of this section, the term `base
amount' means the amount which would be determined for the taxable year
under section 41(c) (without regard to paragraph (4) thereof) if such
subsection were applied by substituting `qualified vaccine research
expenses' for `qualified research expenses' each place it appears.
``(d) Coordination With Credit for Increasing Research
Expenditures.--Any qualified vaccine research expenses for a taxable
year to which an election under this section applies shall not be taken
into account for purposes of determining the credit allowable under
section 41 for such taxable year.
``(e) Special Rules.--
``(1) Certain rules made applicable.--Rules similar to the
rules of paragraphs (1) and (2) of section 41(f) shall apply
for purposes of this section.
``(2) Election.--This section (other than subsection (f))
shall apply to any taxpayer for any taxable year only if such
taxpayer elects to have this section apply for such taxable
year.
``(f) Shareholder Equity Investment Credit in Lieu of Research
Credit.--
``(1) In general.--For purposes of section 38, the vaccine
research credit determined under this section for the taxable
year shall include an amount equal to 25 percent of the amount
paid by the taxpayer to acquire qualified research stock in a
corporation if--
``(A) the amount received by the corporation for
such stock is used within 18 months after the amount is
received to pay qualified vaccine research expenses of
the corporation for which a credit would (but for
subparagraph (B) and subsection (d)(3)) be determined
under this section, and
``(B) the corporation waives its right to the
credit determined under this section for the qualified
vaccine research expenses which are paid with such
amount.
``(2) Qualified research stock.--For purposes of paragraph
(1), the term `qualified research stock' means any stock in a C
corporation--
``(A) which is originally issued after the date of
the enactment of the Vaccine for the New Millennium Act
of 2000,
``(B) which is acquired by the taxpayer at its
original issue (directly or through an underwriter) in
exchange for money or other property (not including
stock), and
``(C) as of the date of issuance, such corporation
meets the gross assets tests of subparagraphs (A) and
(B) of section 1202(d)(1).''.
(b) Inclusion in General Business Credit.--
(1) In general.--Section 38(b) of the Internal Revenue Code
of 1986 (relating to current year business credit) is amended
by striking ``plus'' at the end of paragraph (11), by striking
the period at the end of paragraph (12) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(13) the vaccine research credit determined under section
45D.''.
(2) Transition rule.--Section 39(d) of such Code (relating
to transitional rules) is amended by adding at the end the
following new paragraph:
``(9) No carryback of section 45d credit before
enactment.--No portion of the unused business credit for any
taxable year which is attributable to the vaccine research
credit determined under section 45D may be carried back to a
taxable year ending before the date of the enactment of section
45D.''.
(c) Denial of Double Benefit.--Section 280C of the Internal Revenue
Code of 1986 (relating to certain expenses for which credits are
allowable) is amended by adding at the end the following new
subsection:
``(d) Credit for Qualified Vaccine Research Expenses.--
``(1) In general.--No deduction shall be allowed for that
portion of the qualified vaccine research expenses (as defined
in section 45D(b)) otherwise allowable as a deduction for the
taxable year which is equal to the amount of the credit
determined for such taxable year under section 45D(a).
``(2) Certain rules to apply.--Rules similar to the rules
of paragraphs (2), (3), and (4) of subsection (c) shall apply
for purposes of this subsection.''.
(d) Deduction for Unused Portion of Credit.--Section 196(c) of the
Internal Revenue Code of 1986 (defining qualified business credits) is
amended by striking ``and'' at the end of paragraph (7), by striking
the period at the end of paragraph (8) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(9) the vaccine research credit determined under section
45D(a) (other than such credit determined under the rules of
section 280C(d)(2)).''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 45D. Credit for medical research
related to developing vaccines
against widespread diseases.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
(g) Distribution of Vaccines Developed Using Credit.--It is the
sense of Congress that if a tax credit is allowed under section 45D of
the Internal Revenue Code of 1986 to any corporation or shareholder of
a corporation by reason of vaccine research expenses incurred by the
corporation in the development of a vaccine, such corporation should
certify to the Secretary of the Treasury that, within 1 year after that
vaccine is first licensed, such corporation will establish a good faith
plan to maximize international access to high quality and affordable
vaccines.
(h) Study.--The Secretary of the Treasury, in consultation with the
Institute of Medicine, shall conduct a study of the effectiveness of
the credit under section 45D of the Internal Revenue Code of 1986 in
stimulating vaccine research. Not later than the date which is 4 years
after the date of the enactment of this Act, the Secretary shall submit
to the Congress the results of such study together with any
recommendations the Secretary may have to improve the effectiveness of
such credit in stimulating vaccine research.
SEC. 6. CREDIT FOR CERTAIN SALES OF LIFESAVING VACCINES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits), as amended by section 5(a), is amended by adding at the end
the following new section:
``SEC. 45E. CREDIT FOR CERTAIN SALES OF LIFESAVING VACCINES.
``(a) In General.--For purposes of section 38, the lifesaving
vaccine sale credit determined under this section with respect to a
taxpayer for the taxable year is an amount equal to the amount of
qualified vaccine sales for the taxable year.
``(b) Qualified Vaccine Sales.--For purposes of this section--
``(1) In general.--The term `qualified vaccine sales' means
the aggregate amount paid to the taxpayer for a qualified sale.
``(2) Qualified sale.--
``(A) In general.--The term `qualified sale' means
a sale of a qualified vaccine--
``(i) to a nonprofit organization,
governmental unit, or government of any foreign
government, and
``(ii) for distribution in a developing
country.
``(B) Developing country.--For purposes of this
paragraph, the term `developing country' means a
country which the International Bank for Reconstruction
and Development (commonly referred to as the
`World Bank') determines to be a country with a lower middle income or
less.
``(3) Qualified vaccine.--The term `qualified vaccine'
means a vaccine (as defined in section 4132(a)(2)) which is--
``(A) approved by the Food and Drug Administration
as a new drug after the date of the enactment of this
paragraph, and
``(B) used for--
``(i) malaria,
``(ii) tuberculosis,
``(iii) HIV, or
``(iv) any infectious disease (of a single
etiology) that is determined by the Secretary
of Health and Human Services (after
consultation with the Director of the Center
for Disease Control and Prevention and the
United States Agency for International
Development) to cause the deaths of over
1,000,000 people worldwide each year.
``(c) Limit on Amount of Credit.--The maximum amount of the credit
allowable under subsection (a) with respect to a sale shall not exceed
the portion of the limitation amount allocated under subsection (d)
with respect to such sale.
``(d) National Limitation on Amount of Credits.--
``(1) In general.--Except as provided in paragraph (3),
there is a lifesaving vaccine sale credit for each calendar
year equal to--
``(A) $100,000,000 for each of years 2002 through
2006,
``(B) $125,000,000 for each of years 2007 through
2010, and
``(C) zero after 2011.
``(2) Allocation of limitation.--
``(A) In general.--The limitation amount under
paragraph (1) shall be allocated on a competitive basis
for any calendar year by the Secretary (in consultation
with the Administrator of the United States Agency for
International Development) among organizations with an
approved application.
``(B) Approved application.--For purposes of
subparagraph (A), the term `approved application' means
an application which is approved by the Administrator
of the United States Agency for International
Development with respect to a qualified sale made
during the calendar year. Such application shall be
made at such time and in such form and manner as the
Administrator shall prescribe by regulation and shall
include a detailed and cost-effective plan for
distribution of the vaccine.
``(3) Carryover of unused limitation.--If the limitation
amount under paragraph (1) for any calendar year exceeds the
aggregate amount allocated under paragraph (2), such limitation
for the following calendar year shall be increased by the
amount of such excess. The limitation amount shall remain
available until expended.
``(e) Special Rules.--For purposes of this section, rules similar
to the rules of section 41(f)(2) shall apply.''.
(b) Inclusion in General Business Credit.--
(1) In general.--Section 38(b) of the Internal Revenue Code
of 1986 (relating to current year business credit), as amended
by section 5(b)(1), is amended by striking ``plus'' at the end
of paragraph (12), by striking the period at the end of
paragraph (13) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(14) the lifesaving vaccine sale credit determined under
section 45E.''.
(2) Transition rule.--Section 39(d) of such Code (relating
to transitional rules), as amended by section 5(b)(2), is
amended by adding at the end the following new paragraph:
``(10) No carryback of section 45e credit before
enactment.--No portion of the unused business credit for any
taxable year which is attributable to the lifesaving vaccine
sale credit determined under section 45E may be carried back to
a taxable year ending before the date of the enactment of
section 45E.''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986, as amended by section 5(e), is amended by adding at the end the
following new item:
``Sec. 45E. Credit for certain sales of
lifesaving vaccines.''.
(d) Effective Date.--The amendments made by this section shall
apply to sales of vaccines in taxable years beginning after December
31, 2000.
SEC. 7. LIFESAVING VACCINE PURCHASE FUND.
(a) Purpose.--It is the purpose of this section to--
(1) create incentives for private sector research into
vaccines for HIV, malaria, tuberculosis, and other major
infectious diseases; and
(2) ensure that vaccines for major infectious diseases are
affordable and widely distributed.
(b) Definitions.--In this section:
(1) Developing country.--The term ``developing country''
means a country which the International Bank for Reconstruction
and Development (commonly referred to as the ``World Bank'')
determines to be a country with a lower middle income or less.
(2) Eligible vaccine.--The term ``eligible vaccine'' has
the meaning given the term ``qualified vaccine'' in section
45E(b)(3) of the Internal Revenue Code of 1986.
(c) Establishment of Trust Fund.--There is established in the
Treasury of the United States a trust fund to be known as the
``Lifesaving Vaccine Purchase Fund'' (in this section referred to as
the ``Fund'') consisting of amounts appropriated under subsection (f).
(d) Investment of Fund.--Amounts in the Fund shall be invested in
accordance with section 9702 of title 31, United States Code, and any
interest on, and proceeds from any such investment shall be credited to
and become part of the Fund.
(e) Use of Fund.--
(1) In general.--The Secretary of Treasury (in this section
referred to as the ``Secretary'') is authorized to expend
amounts in the Fund for purchases of eligible vaccines. Such
vaccines shall be distributed to developing countries.
(2) Limitation.--The Secretary shall not make expenditures
from the Fund in excess of $100,000,000 for any fiscal year.
(3) Regulations.--The Secretary shall promulgate such
regulations as are necessary to carry out the provisions of
this subsection, including regulations regarding--
(A) the procedures for purchasing eligible
vaccines, including pricing rules which take into
account the seller's research and development and
manufacturing costs and the desirability of the vaccine
purchased, a funding formula establishing a minimum
price per dose, and minimum technical requirements and
a market test requirement for the eligible vaccine; and
(B) the distribution of eligible vaccines to
developing countries under agreements between the
United States Agency for International Development and
international organizations or recipient developing
countries that provide for--
(i) consideration of the prevalence of the
disease treated by the eligible vaccine in the
recipient developing country;
(ii) consideration of the ability of the
recipient country to effectively and safely
deliver the vaccines; and
(iii) a required matching payment by the
recipient developing country based on the per
capita income of the country, in an amount not
in excess of 25 percent of the purchase price
paid for such vaccine.
(4) Consultation.--The Secretary shall promulgate
regulations under paragraph (3) after extensive consultation
with--
(A) the International Bank for Reconstruction and
Development (commonly referred to as the ``World
Bank'');
(B) the World Health Organization; and
(C) the Secretary of Health and Human Services.
(f) Appropriations.--
(1) In general.--Subject to paragraph (2), there are
appropriated out of any funds in the Treasury not otherwise
appropriated such sums as may be necessary to carry out the
purposes of the Fund for each of 10 fiscal years beginning with
the first fiscal year in which the Secretary makes an
expenditure from the Fund.
(2) Limitation.--The amount appropriated for any fiscal
year under paragraph (1) may not exceed $100,000,000.
(3) Transfer to fund.--The Secretary shall transfer the
amount appropriated under paragraph (1) for a fiscal year to
the Fund.
(4) Availability.--Amounts appropriated under this section
shall remain available until expended.
SEC. 8. MULTILATERAL LIFESAVING VACCINE PURCHASE FUND.
(a) Negotiations.--The President should enter into negotiations
with officials of foreign governments and other interested parties for
the establishment of an international vaccine purchase fund that
would--
(1) accept contributions from governments of developed
countries;
(2) use such contributions to purchase and distribute in
developing countries vaccines for--
(A) malaria,
(B) tuberculosis,
(C) HIV, and
(D) any infectious disease (of a single etiology)
which causes the deaths of over 1,000,000 people
worldwide each year; and
(3) be a significant market incentive for private sector
vaccine research.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, and annually thereafter, the President shall report to
Congress on--
(1) the status of negotiations under subsection (a); and
(2) if such fund is established, any recommendations for
further action, including recommendations regarding the
Lifesaving Vaccine Purchase Fund established under section 7 of
this Act.
SEC. 9. SENSE OF CONGRESS.
It is the sense of Congress that flexible or differential pricing
for vaccines, providing lowered prices for the poorest countries, is
one of several valid strategies to accelerate the introduction of
vaccines in developing countries.
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