[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 895

 To amend the Internal Revenue Code of 1986 to allow a credit against 
    income tax for 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

                 May 16 (legislative day, May 15), 2001

 Mr. Kerry (for himself and Mr. Frist) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow a credit against 
    income tax for 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 2001''.

SEC. 2. 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. 45E. 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 30 percent of the qualified vaccine research 
expenses for the taxable year.
    ``(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; increased incentive for 
                contract research payments.--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 `100 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.--The term `vaccine research' means 
        research to develop vaccines and microbicides for--
                    ``(A) malaria,
                    ``(B) tuberculosis,
                    ``(C) HIV, or
                    ``(D) any infectious disease (of a single etiology) 
                which, according to the World Health Organization, 
                causes over 1,000,000 human deaths annually.
    ``(c) Coordination With Credit for Increasing Research 
Expenditures.--
            ``(1) In general.--Except as provided in paragraph (2), 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.
            ``(2) Expenses included in determining base period research 
        expenses.--Any qualified vaccine research expenses for any 
        taxable year which are qualified research expenses (within the 
        meaning of section 41(b)) shall be taken into account in 
        determining base period research expenses for purposes of 
        applying section 41 to subsequent taxable years.
    ``(d) Special Rules.--
            ``(1) Limitations on foreign testing.--No credit shall be 
        allowed under this section with respect to any vaccine research 
        (other than human clinical testing) conducted outside the 
        United States.
            ``(2) Pre-clinical research.--No credit shall be allowed 
        under this section for pre-clinical research unless such 
        research is pursuant to a research plan an abstract of which 
        has been filed with the Secretary before the beginning of such 
        year. The Secretary, in consultation with the Secretary of 
        Health and Human Services, shall prescribe regulations 
        specifying the requirements for such plans and procedures for 
        filing under this paragraph.
            ``(3) 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.
            ``(4) Election.--This section (other than subsection (e)) 
        shall apply to any taxpayer for any taxable year only if such 
        taxpayer elects to have this section apply for such taxable 
        year.
    ``(e) Credit To Be Refundable for Certain Taxpayers.--
            ``(1) In general.--In the case of an electing qualified 
        taxpayer--
                    ``(A) the credit under this section shall be 
                determined without regard to section 38(c), and
                    ``(B) the credit so determined shall be allowed as 
                a credit under subpart C.
            ``(2) Electing qualified taxpayer.--For purposes of this 
        subsection, the term `electing qualified taxpayer' means, with 
        respect to any taxable year, any domestic C corporation if--
                    ``(A) the aggregate gross assets of such 
                corporation at any time during such taxable year are 
                $500,000,000 or less,
                    ``(B) the net income tax (as defined in section 
                38(c)) of such corporation is zero for such taxable 
                year and the 2 preceding taxable years,
                    ``(C) as of the close of the taxable year, the 
                corporation is not under the jurisdiction of a court in 
                a title 11 or similar case (within the meaning of 
                section 368(a)(3)(A)),
                    ``(D) the corporation provides such assurances as 
                the Secretary requires that, not later than 2 taxable 
                years after the taxable year in which the taxpayer 
                receives any refund of a credit under this subsection, 
                the taxpayer will make an amount of qualified vaccine 
                research expenses equal to the amount of such refund, 
                and
                    ``(E) the corporation elects the application of 
                this subsection for such taxable year.
            ``(3) Aggregate gross assets.--Aggregate gross assets shall 
        be determined in the same manner as such assets are determined 
        under section 1202(d).
            ``(4) Controlled groups.--A corporation shall be treated as 
        meeting the requirement of paragraph (2)(B) only if each person 
        who is treated with such corporation as a single employer under 
        subsections (a) and (b) of section 52 also meets such 
        requirement.
            ``(5) Special rules.--
                    ``(A) Recapture of credit.--The Secretary shall 
                promulgate such regulations as necessary and 
                appropriate to provide for the recapture of any credit 
                allowed under this subsection in cases where the 
                taxpayer fails to make the expenditures described in 
                paragraph (2)(D).
                    ``(B) Exclusion of certain qualified vaccine 
                research expenses.--For purposes of determining the 
                credit under this section for a taxable year, the 
                qualified vaccine research expenses taken into account 
                for such taxable year shall not include an amount paid 
                or incurred during such taxable year equal to the 
                amount described in paragraph (2)(D) (and not already 
                taken into account under this subparagraph for a 
                previous taxable year).''.
    (b) Inclusion in General Business Credit.--
            (1) In general.--Section 38(b) of the Internal Revenue Code 
        of 1986 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 vaccine research credit determined under section 
        45E.''.
            (2) Transition rule.--Section 39(d) of such Code 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 vaccine research 
        credit determined under section 45E may be carried back to a 
        taxable year ending before the date of the enactment of section 
        45E.''.
    (c) Denial of Double Benefit.--Section 280C of the Internal Revenue 
Code of 1986 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 45E(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 45E(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 (8), by striking 
the period at the end of paragraph (9) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(10) the vaccine research credit determined under section 
        45E(a) (other than such credit determined under the rules of 
        section 280C(d)(2)).''.
    (e) Technical Amendments.--
            (1) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``or from section 45E(e) of such Code,'' 
        after ``1978,''.
            (2) 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. 45E. 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) Study.--
            (1) In general.--The National Institutes of Health shall 
        conduct a study of the extent to which the credit under section 
        45E of the Internal Revenue Code of 1986, as added by 
        subsection (a), has stimulated vaccine research.
            (2) Report.--Not later than the date that is 5 years after 
        the date of the enactment of this Act, the National Institutes 
        of Health shall submit to Congress the results of the study 
        conducted under paragraph (1), together with recommendations 
        (if any) to improve the effectiveness of such credit in 
        stimulating vaccine research.

SEC. 3. 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 2, is amended by adding at the end the 
following new section:

``SEC. 45F. 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 or to a 
                        government of any foreign country (or 
                        instrumentality of such a 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 Secretary determines to be a country 
                with a lower middle income or less (as such term is 
                used by the International Bank for Reconstruction and 
                Development).
            ``(3) Qualified vaccine.--The term `qualified vaccine' 
        means any vaccine and microbicide--
                    ``(A) which is described in section 45E(b)(2), and
                    ``(B) which is approved as a new drug after the 
                date of the enactment of this paragraph by--
                            ``(i) the Food and Drug Administration,
                            ``(ii) the World Health Organization, or
                            ``(iii) the appropriate authority of a 
                        country included in the list under section 
                        802(b)(1) of the Federal Food, Drug, and 
                        Cosmetic Act.
    ``(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 limitation amount for 
        each calendar year equal to--
                    ``(A) $100,000,000 for each of years 2002 through 
                2006, and
                    ``(B) $125,000,000 for each of years 2007 through 
                2010.
            ``(2) Allocation of limitation.--
                    ``(A) In general.--The limitation amount under 
                paragraph (1) shall be allocated for any calendar year 
                by the Administrator of the United States Agency for 
                International Development (referred to in this section 
                as the `Administrator') among organizations with an 
                application approved by the Administrator in accordance 
                with subparagraph (B).
                    ``(B) Application for allocation.--The 
                Administrator shall prescribe the procedures for an 
                application for an allocation under this subsection and 
                the factors to be taken into account in making such 
                allocations. Such applications shall be made at such 
                time and in such form and manner as the Administrator 
                shall prescribe and shall include a detailed 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. No amount may be carried under the 
        preceding sentence to any calendar year after 2020.
    ``(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 2(b), is amended by striking ``plus'' at the end of 
        paragraph (13), by striking the period at the end of paragraph 
        (14) and inserting ``, plus'', and by adding at the end the 
        following new paragraph:
            ``(15) the lifesaving vaccine sale credit determined under 
        section 45F.''.
            (2) Transition rule.--Section 39(d) of such Code (relating 
        to transitional rules), as amended by section 2(b), is amended 
        by adding at the end the following new paragraph:
            ``(11) No carryback of section 45f 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 45F may be carried back to 
        a taxable year ending before the date of the enactment of 
        section 45F.''.
    (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 2(c), is amended by adding at the end the 
following new item:

                              ``Sec. 45F. Credit for certain sales of 
                                        lifesaving vaccines.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to sales of vaccines after December 31, 2001, in taxable years 
ending after such date.

SEC. 4. 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 
        45F(b)(3) of the Internal Revenue Code of 1986, as added by 
        section 3(a).
    (c) Establishment of Fund.--As of the date that the Secretary of 
the Treasury (referred to in this section as the ``Secretary'') 
determines that any eligible vaccine is available for purchase, there 
is established in the Treasury of the United States a fund to be known 
as the ``Lifesaving Vaccine Purchase Fund'' (referred to in this 
section 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 is authorized to expend 
        amounts in the Fund for purchases of eligible vaccines. Such 
        vaccines shall be distributed to developing countries.
            (2) Purchase and distribution of vaccines.--
                    (A) Purchase prices, etc.--Vaccines purchased by 
                the Fund--
                            (i) shall be purchased at prices which take 
                        into account the seller's research, 
                        development, and manufacturing costs and the 
                        desirability of the vaccine purchased; and
                            (ii) shall be purchased under a funding 
                        formula establishing a minimum price per dose 
                        and minimum technical requirements and a market 
                        test requirement for the eligible vaccine.
            (3) Distribution.--Eligible vaccines purchased by the Fund 
        shall be distributed to developing countries under agreements 
        between the United States Agency for International Development 
and international organizations or recipient developing countries that 
provide for--
                    (A) consideration of the prevalence of the disease 
                treated by the eligible vaccine in the recipient 
                developing country;
                    (B) consideration of the ability of the recipient 
                developing country to effectively and safely deliver 
                the vaccines; and
                    (C) 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) Regulations.--The Secretary shall promulgate such 
        regulations as are necessary to carry out the provisions of 
        this subsection.
            (5) Consultation.--The Secretary shall promulgate 
        regulations under paragraph (4) 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 after the date that the Secretary 
        determines that any eligible vaccine is available for purchase 
        by the Fund.
            (2) Transfer to fund.--The Secretary shall transfer the 
        amount appropriated under paragraph (1) for a fiscal year to 
        the Fund.
            (3) Availability.--Amounts appropriated under this section 
        shall remain available without fiscal year limitation until 
        expended.

SEC. 5. SENSES OF CONGRESS.

    It is the sense of Congress that the following issues exist:
            (1) Manufacturing capacity.--Delivery of vaccines to 
        developing country populations is often delayed a decade or 
        more after these products are licensed for use in 
        industrialized nations. This delay is due partly to inadequate 
        manufacturing capacity that limits supply of vaccines in the 
        early years of their distribution. The public sector has a role 
        to play in ensuring that manufacturing capacity for vaccines 
        for the priority diseases referred to in section 45E(b)(2) of 
        the Internal Revenue Code of 1986, as added by section 2, is 
        sufficient to secure access to these vaccines simultaneously in 
        industrialized and developing countries. It is appropriate for 
        the Federal Government to consider a variety of mechanisms in 
        order to ensure adequate manufacturing capacity to meet this 
        goal. These mechanisms may include loan programs, accelerated 
        depreciation, revenue bonds, or infrastructure grants.
            (2) Distribution of vaccines developed using credit.--Given 
        the important goal of ensuring that all those in need, in both 
        industrialized and developing countries, reap the benefits of 
        any vaccine or microbicide that is developed for HIV, 
        tuberculosis, or malaria, and acknowledging the importance of 
        intellectual property rights and the right of corporations and 
        shareholders of corporations to set prices, retain patent 
        ownership, and maintain confidentiality of privileged 
        information, corporations and shareholders of corporations who 
        elect to take the credit under section 45E of the Internal 
        Revenue Code of 1986, as so added, for research expenses 
        incurred in the development of a vaccine or microbicide shall 
        certify to the Secretary of the Treasury that, not later than 
        the date which is 1 year after the date on which the vaccine or 
        microbicide is first licensed, such corporation will establish 
        a plan to maximize distribution of such vaccine or microbicide 
        in the developing world using such mechanisms as technology 
        transfer, differential pricing, and in-country production where 
        possible, or other mechanisms to maximize international access 
        to high quality and affordable vaccines.
            (3) Continued support of global efforts.--The Federal 
        Government should continue supporting the work of the Global 
        Alliance for Vaccines and Immunizations and the Global Fund for 
        Children's Vaccines as an appropriate and effective vehicle to 
        purchase and distribute these vaccines at an affordable price 
        once they are discovered in order to distribute them to the 
        developing world, as it does with vaccines against hepatitis-B, 
        haemophilus influenza, and yellow fewer.
            (4) Tiered pricing.--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.
                                 <all>