[Congressional Record Volume 144, Number 67 (Friday, May 22, 1998)]
[Senate]
[Pages S5445-S5448]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CHAFEE (for himself, Mr. Breaux, Mr. Murkowski, Mr. 
        Cochran, Mr. Inouye, Mr. Daschle, Mr. Rockefeller, Mr. Mack, 
        Mr. Lugar, Mr. Bumpers, Mr. Frist, and Mr. Santorum):
  S. 2118. A bill to amend the Internal Revenue Code of 1986 to reduce 
the tax on vaccines to 25 per dose; to the Committee on Finance.


        legislation lowering the federal excise tax on vaccines

 Mr. CHAFEE. Mr. President, today I am introducing legislation 
reducing the excise tax on vaccines from seventy-five cents to twenty-
five cents per dose. I am introducing this bill along with my 
colleagues on the Finance Committee, Senators Breaux, Mack and 
Rockefeller as well as Senators Daschle, Murkowski, Cochran, Inouye, 
Lugar, Bumpers, Frist, and Santorum.
  Vaccines are a modern miracle--preventing disease and illness often 
for a lifetime with just a few doses. Vaccines have virtually 
eliminated the scourge of smallpox in the world. Polio as a wild virus 
has been eliminated in the western hemisphere. Measles, mumps, rubella, 
pertussis, diphtheria, tetanus and hepatitis vaccines have saved 
thousands of lives. Technology in vaccines is on the brink of 
preventing other diseases ranging from Lyme disease to widespread 
rotavirus in the third world.
  Unfortunately, there is a small minority of children whose systems 
cannot handle vaccines and become injured. Recognizing this problem and 
acknowledging that childhood vaccination is required, Congress in 1986 
set up a Vaccine Injury Compensation Trust Fund into which federal 
excise taxes are paid. This modified no-fault system allows parents of 
vaccine-injured children to receive compensation for their children if 
the vaccine is covered by the fund. Childhood vaccines recommended by 
the federal government for routine use in children are covered (1) once 
approved by the Advisory Committee on Immunization Practices, (2) added 
to the Vaccine Injury Compensation Program (VICP), and (3) included on 
the list of vaccines on which the tax is imposed by Congress.
  When the trust fund was established there was no experience with what 
claims would commit to and what the size of the tax should be. 
Estimates were made and different tax levels were established for each 
vaccine.
  By 1993, it was apparent that the tax levels were far too high and a 
surplus was building up in the fund. Today that surplus totals 1.2 
billion dollars. The Ways and Means and Finance Committees directed the 
Administration to study the system and develop a proposal that solves 
the overfunding problem.

  A consensus proposal was drafted and signed on to by all sectors of 
the public health community--physicians, manufacturers, parent's groups 
and health departments. That plan called for a new flat tax of 51 cents 
per antigen (or disease). But even this new rate was far more than was 
necessary to fund the system. For example, the guardian of the fund, 
the Advisory Commission on Childhood Vaccines, recommended 25 cents per 
antigen even when the surplus was half its level today.
  Last year, as part of the balanced budget bill, Congress established 
a single rate tax structure but did so at a level of seventy-five cents 
per dose. The seventy-five cents per dose amount was chosen to satisfy 
the revenue neutrality goals of the overall bill. Congress did not 
solve the overfunding problem and the result was that while some 
vaccine taxes were reduced dramatically, others were increased. Three 
new vaccines were added to the program at the seventy-five cents per 
dose rate.
  At the beginning of this year, the Vaccine Injury Compensation Trust 
Fund had a balance of 1.2 billion dollars. If you assumed that future 
outlays from the fund would be twice as large as the fund's average 
over the past eight years, it would take more than 20 years to exhaust 
the assets in the trust fund, even if no excise tax revenues were 
collected from this date forward. Stated another way, the interest 
earned on the trust fund assets is more than enough to pay annual 
claims and administrative cost. As with many other trust funds within 
the federal budget, these taxes are being used for other federal 
spending.
  This proposal will also provide significant benefits to the states. 
When states purchase vaccines they pay the excise tax. Our bill would 
save the States $52 million annually. For my home state of Rhode 
Island, that would amount to 353,000 dollars annually. By lowering 
these taxes we can lower health care costs to vaccine recipients and 
providers while saving states and the federal government the money they 
now pay in excise taxes when they buy vaccines.
  This proposal is supported by physicians, state health departments, 
manufacturers and parental groups. Most significantly, the Advisory 
Commission on Childhood Vaccines (ACCV) which Congress created to make 
recommendations on changes to the Vaccine Injury Compensation Program, 
strongly supports this proposal.
  I encourage my colleagues to join me as cosponsors of this important 
health initiative.
 Mr. BREAUX. Mr. President, today I introduce with my colleague 
from Rhode Island, Senator Chafee, a very important bill for America's 
children. Our bill, the Vaccinate America's Children Now Act, will cut 
the excise tax on all vaccines to twenty-five cents per dose. Lowering 
the price of vaccines against such deadly and crippling diseases as 
polio and meningitis will not only result in lower health care costs, 
but also greater immunization rates. As a result, fewer American 
children will ever have to know the pain and devastation of childhood 
disease.
  Federal excise taxes on vaccines were first enacted in the late 1980s 
to fund a vaccine injury compensation fund to pay for those rare 
injuries associated with vaccination. Since enactment, this 
compensation fund has accumulated a surplus of $1.2 billion and the 
surplus continues to grow. However, claims against the fund have been 
falling as a result of safer vaccines. The interest alone on this fund 
is now enough to pay the anticipated claims and costs each year. 
Lowering the excise tax rate on vaccines will not endanger the solvency 
of the vaccine injury compensation trust fund in any way. In fact, the 
guardian of the trust fund, the Advisory Commission on Childhood 
Vaccines has unanimously endorsed our proposal.
  Lowering the vaccine tax rates will, however, reduce health care 
costs and make immunization more affordable. Our bill will save states 
money because

[[Page S5448]]

states pay these excise taxes when vaccines are purchased for state 
immunization programs. For example, our bill will save my own State of 
Louisiana approximately $1 million. Nationwide, reducing the excise tax 
will save the states almost $53 million. These cost savings are one 
reason why the Association of States and Territorial Health Officers 
which represents all of the state health departments also supports our 
bill.
  Vaccines are a modern miracle--preventing disease and illness often 
for a lifetime with just a few doses. Vaccines have virtually 
eliminated the scourge of smallpox in the world. Polio as a wild virus 
has been eliminated in the western hemisphere. Measles, mumps, rubella, 
pertussis, diphtheria, tetanus and hepatitis vaccines have saved 
thousands of lives. We must do every thing that we can to ensure that 
children continue to be immunized. Our bill will make these vaccines 
more affordable and more available to all of America's 
children.
                                 ______