[Congressional Record Volume 146, Number 21 (Wednesday, March 1, 2000)]
[Senate]
[Pages S1026-S1028]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself, Mr. Frist, and Mrs. Murray):
  S. 2132. 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; to the 
Committee on Foreign Relations.


              vaccines for the new millennium act of 2000

 Mr. KERRY. Mr. President, today I am pleased to introduce the 
Vaccines for the New Millennium Act of 2000. I have the honor of being 
joined by the distinguished chairman of the Africa Subcommittee, 
Senator Frist, and my friend, the Senator from Washington, Mrs. Murray. 
This bill addresses a catastrophic problem that needs our immediate 
attention.

[[Page S1027]]

  The proportions of the AIDS calamity in Africa are stupefying. More 
than 33 million people are infected with HIV--95 percent of them in 
sub-Saharan Africa. This disease will kill more than 2.5 million this 
year. It has already orphaned 11 million children, and it will orphan 
40 million by 2010. These numbers are incomprehensible. To put in 
perspective, nearly 60 people will become infected with HIV in the time 
it takes me to testify today.
  In addition, tuberculosis will kill close to 2 million this year, and 
a person dies from malaria every thirty seconds. No nation--but 
particularly ours--as rich as we are in talent, technology and money--
can fail to help turn this around.
  We should remember: borders do not matter when you are dealing with 
contagion.
  These epidemics are out of control. And if we are to reverse this 
death spiral, we need to institute bold new measures. We must provide 
new global health infrastructures which look at long-term solutions for 
disease eradication. And, until they are established, we must provide 
much-needed short-term financing for disease prevention and treatment.
  Mr. President, a number of my colleagues have shown great leadership 
in trying to find a solution to the health emergencies in the 
developing countries.
  I applaud the work of my friend, Senator Durbin with whom I have 
joined on a number of bills this year. I also recognize and support the 
efforts of Senator Boxer and Senator Smith for their work on the Global 
AIDS Plan. Senator Moynihan and Senator Feingold also have an important 
plan to prevent vertical transmission of HIV from mother to child. I 
have supported all these plans.
  Mr. President, I think we need to acknowledge the scope of this 
epidemic requires a bold response which looks beyond just preventing 
and treating this disease. The epidemiology of this disease dictates 
lifetime adherence to preventive measures. I am fully supportive of 
prevention programs--I have seen their very positive effect in the AIDS 
Action Committee in Boston and in AIDS Project Worcester. The Outer 
Cape also has a tremendous program which I support every year in 
Provincetown and these are echoed in small towns across Massachusetts 
which have accessed CDC grants and instituted the absolute best of 
community-based programs. I have also been an early and consistent 
supporter of the Ryan White program which comes up for reauthorization 
this year.
  But, Mr. President, we need a vaccine--for the United States and for 
the developing world.
  Vaccines are the most cost-effective weapon in the arsenal of modern 
medicine to stop the spread of contagious disease, and they offer a 
relatively inexpensive means of lowering a society's overall cost of 
medical care. Prime examples of the success are the three million 
children whose lives are saved each year as a result of early childhood 
immunizations against diphtheria, polio, pertussis, tetanus, measles, 
and tuberculosis.
  Mr. President, consider the alternatives we have now. Pharmaceutical 
products, like the highly touted antiviral ``cocktail'' for treating 
AIDS patients can cost, on average, as much as $15,000 a year. That is 
a princely sum for even wealthy countries but clearly, for nations with 
per capita incomes of $700 or $800 like Malawi, such treatments and 
drugs are nowhere in the real of affordability. They also require 
enormous infrastructure investments and medical compliance which is 
difficult to adhere to in this country let alone developing societies.
  For these nations, finding an affordable vaccine for AIDS is really 
the only option that offers them an opportunity for gaining control 
over the AIDS epidemic.
  Unfortunately, of the $2.4 billion or so spent on overall AIDS 
research last year, only a fraction was spent on AIDS vaccine research.
  The World Bank estimates that perhaps between $280 million and $350 
million was spend worldwide on finding a vaccine for AIDS in 1999, or 
somewhere between 10 and 15 percent of the total amount spent on AIDS 
research.
  Furthermore, of the $300 million or so spent on HIV vaccine research, 
less than $50 million came from private sector research and development 
budgets. Simply put, our biotechnology and pharmaceutical industries do 
not believe that investing in AIDS vaccine research is a good 
investment.
  So, Mr. President, we have a responsibility, an obligation, to change 
this perception. Investing in an AIDS vaccine is one of the best 
investments we as a nation can make. And for Africa, it is the only 
hope for survival.
  And while continued and expanded investments in our research engines 
are vitally important--I am referring to AIDS research at the National 
Institutes of Health--the time has come for us to explore additional 
strategies for stimulating private sector AIDS vaccine research and 
development.
  We must look for innovative financing mechanisms. We must instill the 
financial incentives for our pharmaceutical and biotechnology sectors 
to engage in areas that have previously ignored.
  Mr. President, I was amazed to learn that of the $56 billion a year 
spent globally on health research, well over 90 percent is spent on 
research into health problems that concern only 10 percent of the 
world's population.
  Amazingly, of the 1,200 new drugs commercialized between 1975 and 
1997, only 13 were for tropical diseases--diseases such as malaria and 
tuberculosis which combined kill close to 3 million people a year.
  Why is it that pharmaceutical companies don't invest in these 
diseases? Because there is no hope for finding a vaccine for malaria? 
No hope for finding an affordable vaccine for tuberculosis or HIV? Is 
the science just insurmountable?
  Absolutely not.
  Companies don't invest in these diseases because they don't foresee a 
profit. A malaria vaccine, while offering the potential to save 
millions of lives, does not offer the same return to shareholders as 
the return from Viagra, Lipitor, Prozac, or other blockbusters here in 
the United States. I don't blame the pharmaceutical industry for 
concern about their shareholders, but I believe it is morally 
imperative to jumpstart research into vaccines as quickly as possible.
  What then, is the answer? Should we turn our back on these diseases 
as a casualty of the way free markets function? Should we dump billions 
into new government bureaucracies to tackle these problems? The answer 
on both counts is no. We as a nation, and as a responsible member of 
the international community, should create the market incentives to 
encourage our pharmaceutical and biotechnology companies, the best and 
brightest companies in the world, to invest in those diseases which are 
a scourge to the world.
  What we need to do is give pharmaceutical companies the financial 
incentives to achieve what we know is possible and let them work their 
magic--these are the same engines of growth and technological progress 
which have helped extend life expectancy beyond what was imaginable at 
the turn of the century. Now, let's help them turn their attention to 
those diseases which kill millions upon millions in developing 
countries.
  I think this type of public-private partnership is the most efficient 
means of addressing the world's growing health care pandemics. How 
would it world specifically?
  The legislation I introduce today, the ``Vaccines for the New 
Millennium Act,'' provides a number of market incentives to encourage 
private sector investment in lifesaving vaccines. These incentives can 
be classified in one of two ways. Some of them provide a ``push'' 
mechanism--lowering the cost of R&D at the front end. Others provide a 
``pull'' mechanism, demonstrating that a market will exist if the 
pharmaceutical companies provide the product.
  On the push side, first, the bill expands on the research and 
development tax credit by increasing the credit rate from 20 percent to 
50 percent for research related to developing vaccines for AIDS, 
malaria, tuberculosis, or any infectious disease which kills over 1 
million people a year. The tax credit is incremental such that the 
credit applies to research spending which exceeds a base amount. In 
effect, the credit rewards incremental increases in lifesaving vaccine 
research--thus giving our drug companies an incentive for more focus on 
lifesaving vaccines.

[[Page S1028]]

  Second, the bill allows small biotechnology companies which do not 
have tax liability to pass a smaller tax credit through to investors. 
Firms with assets under $50 million may choose to pass through a 25 
percent tax credit to investors who provide financing for research and 
development on one of the priority vaccines. The credit would apply to 
stock issued after the date of enactment and used within 18 months to 
pay for qualified vaccine research expenses.
  Both of these proposals have been endorsed by a combination of public 
health advocacy groups and industry--including AIDS Action Council, the 
Global Health Council, the American Public Health Association and the 
AIDS Vaccine Advocacy Coalition.
  Third, the bill authorizes voluntary contributions to the Global 
Alliance for Vaccines and Immunizations and the International AIDS 
Vaccine Initiative. The Global Alliance for Vaccines and Immunizations 
is an international partnership recently established to expand and 
improve access to existing safe and cost-effective vaccines. It is 
being supported by a number of nations and international donors, 
including an incredibly generous founding gift by the Bill and Melinda 
Gates Foundation. A similar provision was included in the President's 
budget. By working to improve the delivery of existing vaccines, the 
Global Alliance not only offers the opportunity to save lives, it will 
improve health delivery systems for the distribution of future 
vaccines.
  Fourth, the bill authorizes voluntary contributions to the 
International AIDS Vaccine Initiative. In effect, the initiative 
provides financing to industry in return for international access to 
the vaccine. For example, under a typical IAVI/industry agreement, IAVI 
will provide financing in exchange for an agreement with the 
manufacturer to sell the vaccine to developing countries at very 
reasonable prices. Once again, the Bill and Melinda Gates foundation 
provides a large portion of IAVI's funding.
  To further accelerate the invention and production of lifesaving 
vaccines, the bill includes a tax credit proposed in the President's 
budget. Under the proposal, every dollar paid by a qualifying 
organization to buy a lifesaving vaccine would be matched by a dollar 
of tax credits--thereby doubling the purchasing power of nonprofit 
organizations and others that purchase vaccines for developing 
countries. The credit only applies to vaccines not yet developed, thus 
demonstrating the existence of a market if drug companies fill the 
void. The credit would apply to vaccines for AIDS, malaria, 
tuberculosis, or any other disease which kills over 1 million people 
annually.
  The bill also establishes a Lifesaving Vaccine Purchase Fund. This 
approach has been advocated most prominently by Harvard economist 
Jeffrey Sachs, a witness on the third panel.
  Under my proposal, Congress would authorize and advance appropriate 
$100 million a year, over ten years, to a fund for the purchase and 
distribution of newly-developed vaccines for AIDS, malaria, and 
tuberculosis. The first appropriation would not occur until a vaccine 
has been licensed and approved. In effect, by establishing a guaranteed 
market, the proposal would provide a real incentive for additional 
private sector research. However, the money would not be spent until 
the vaccine was developed, thus postponing any cost to the government.
  Finally, the bill directs the Administration to initiate negotiations 
with officials of foreign governments for the establishment of an 
international vaccine purchase fund that would purchase and distribute 
in developing countries vaccines for malaria, tuberculosis, HIV, or any 
infectious disease which kills over 1 million people. It is assumed 
that if such an agreement is reached, the domestic fund described above 
would be integrated into the multilateral agreement.
  This is a comprehensive plan, Mr. President, which I have worked on 
for two years. This past weekend, it was endorsed as a positive step by 
academics, pharmaceutical executives and governmental leaders at a 
high-level conference convened by the University of California at San 
Francisco, World Bank and the Global Forum for Health Research.
  Congresswoman Nancy Pelosi will introduce identical companion 
legislation in the House and it is my hope that our colleagues will 
give it equally serious attention.
                                 ______