[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.
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