[Congressional Record Volume 150, Number 133 (Thursday, November 18, 2004)]
[Senate]
[Pages S11497-S11498]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. INHOFE:
S. 2997. A bill to amend section 1928 of the Social Security Act to
encourage the production of influenza vaccines by eliminating the price
cap applicable to the purchase of such vaccines under contracts entered
into by the Secretary of Health and Human Services, to amend the
Internal Revenue Code of 1986 to establish a tax credit to encourage
vaccine production capacity, and for other purposes; to the Committee
on Finance.
Mr. INHOFE. Mr. President, there was a lot of hysteria a short time
ago about the flu vaccine and the fact it was not available to a lot of
people. There are several problems. One, the flu vaccine production
currently takes approximately 6 months. I am introducing a bill that
will expedite that and will have the sense of the Senate to steer the
NIH research dollars toward the development of faster technology. They
are using egg cultures to grow this vaccine when it can be done through
the cells of silk moths. It will take more research to get there and we
will encourage them to do that.
Second, the bill removes price controls for the purchasing of the flu
vaccine. This happened during the Clinton administration. We should
have learned during the Nixon administration that price controls in
reality do not work. The result of this has been that we do not have
many companies now that are willing to get in there and take the risk
and develop and manufacture these vaccines. As soon as they do, they
find out there is no profit at the other end because of price controls.
Lastly, we allow investment tax credits.
I have long been dedicated to quality healthcare for my constituents
in Oklahoma and across America. I supported the Medicare bill of 2003
to give a voluntary prescription drug benefit to seniors. I have
championed the rural health care providers, who received some of the
greatest benefits of the Medicare bill. In 1997, I was one of few
Republicans to vote against the Balanced Budget Act because of its lack
of support for rural hospitals. Back then, I made a commitment to not
allow our rural hospitals to be closed, and I am pleased we finally
addressed that important issue in the Medicare legislation. I also
cosponsored S. 816, the Health Care Access and Rural Equity Act, to
protect and preserve access of Medicare beneficiaries to health care in
rural regions.
I am a strong advocate of medical liability reform and am an original
cosponsor of S. 11, the Patients First Act, to protect patients' access
to quality and affordable health care by reducing the effects of
excessive liability costs. There are solutions to alleviate the burden
placed on physicians and patients by excessive medical malpractice
lawsuits, and I am committed to this vital reform.
I have also worked with officials from the Center for Medicare and
Medicaid Services to expand access to life-saving Implantable Cardiac
Defibrillators. I supported legislation to increase the supply of
pancreative islet cells for research and cosponsored a bill to take the
abortion pill RU-486 off the market in the United States.
The federal government invests in improving hospitals and healthcare
initiatives, and I have fought hard to ensure that Oklahoma gets its
fair share. Specifically, over the past three years, I have helped to
secure $5.2 million in funding for the Oklahoma Medical Research
Foundation, the Oklahoma State Department of Health planning initiative
for a rural telemedicine system, the INTEGRIS Healthcare System, the
University of Oklahoma Health Sciences Center, the Oklahoma Center for
the Advancement of Science and Technology, St. Anthony's Heart
Hospital, the Hillcrest Healthcare System, and the Morton Health
Center.
The unexpected influenza, flu, vaccine shortage beginning last month
highlights the need to encourage the production of flu vaccine in
America. As you know, on October 5th, Chiron, a California-based
biotechnology company, notified U.S. health officials that its plant in
Liverpool, England had been shut down due to vaccine contamination.
Almost 50,000 doses of flu vaccine were thrown away, which created a
severe shortage for Americans just as the flu season began.
In light of the current shortage, I have examined why America found
itself unable to accommodate the public demand for the flu vaccine. As
we have seen, once a vaccine shortage strikes, a rapid response is
difficult and often impossible. Thirty years ago, more than a dozen
American companies were in the flu vaccine business. Today only two
companies make the vaccine for America, and only one in an America-
based company. This is no coincidence. High liability costs, tedious
production, price caps, and the complicated United States tax code have
kept the market bare.
In October, President Bush signed the JOBS bill, which curbed the
billion-dollar lawsuits that have crippled the flu vaccine industry. By
adding flu vaccine to the list of vaccines protected by the National
Vaccine Injury Compensation Program, VICP, a no-fault alternative must
be used for resolving vaccine injury claims. I am encouraged with this
progress, but more can be done to prevent a shortage in the future.
My bill supports allocating a greater percentage of the National
Institutes of Health budget to develop faster and safer vaccine
production technology. The ever-changing nature of the flu virus
results in a complicated production process. The dominant strain of the
flu virus mutates each year, requiring a different vaccine for every
flu
[[Page S11498]]
season. Because harvesting the flu vaccine currently takes at least six
months and requires tens of thousands of fertilized eggs susceptible to
contamination, this process must begin nearly a year before the flu
season begins.
Research should be focused on developing new technologies to allow us
to produce more vaccine--in the same season--when we encounter a
shortage. A company in Connecticut is developing a flu vaccine relying
on cell lines from silk moths. This type of innovative research
promises to shave at least one month off of production time and
significantly reduce cost.
My bill includes a sense of the Senate on the importance of
allocating a greater percentage of the National Institutes of Health,
NIH, research dollars to developing new technology in flu vaccine
production. The encouragement of safer and faster flu vaccine
production technology is a prudent use of existing Federal research
dollars through the National Institutes of Health.
Furthermore, my bill removes the suffocating price controls that have
discouraged companies from producing the flu vaccine. The Vaccines For
Children program, VFC, enacted under the Clinton administration,
imposed a price cap on all vaccines purchased through Federal
contracts. From a shortsighted perspective, these regulated prices may
expand access to vaccines. However, in the long run this policy
devastates the vaccine production industry and decreases the
availability of vaccines. This occurred in 1998 when manufacturers of
tetanus diphtheria vaccine refused to bid on Government contracts.
Consequently, this vaccine is no longer available to children through
the VFC program.
Similarly, the CDC purchased nearly 12 percent of the flu vaccine
this season, and significant quantities were purchased through the
Department of Defense, the Veteran's Administration and Medicare. The
price controls imposed from Federal government purchasing create a
high-risk, low-reward business market. Price controls destroy any
profit incentive. Manufacturers avoid this artificial environment and
will continue to as long as the government over steps its bounds.
The harmful effect of government price controls is especially
pronounced in the flu vaccine market because the vaccine has a single-
season shelf life. The difficulty of predicting the demand for vaccines
each year exposes companies great risk. A slight drop in demand can
force them out of the market. Financial losses--from 7 million extra
doses in 2002 and 4.5 million extra in 2003--compelled Wyeth
Pharmaceutical Company to end its flu vaccine manufacturing.
In addition to lifting price controls, the government can loosen its
grip on the flu vaccine market by reforming its complicated tax code.
Fortunately, the JOBS bill made headway in simplifying the current
United States international tax rules. To further offset the heavy
penalties within the United States tax code, my bill gives a tax credit
to companies, new and old, that construct facilities to manufacture flu
vaccine.
Currently, ten American companies produce the 47 FDA-approved
vaccines. An investment tax credit will encourage these existing
companies to expand their production to cover the flu vaccine and will
invite start-up companies to join the industry. This will better equip
the United States market to prevent and deal with a shortage in the
future.
Scientific experts consider vaccination to be the most effective
medical intervention, and we live in an age of unprecedented vaccine
development and implementation. We cannot continue to overregulate the
flu vaccine industry and hope companies will hang on and produce
vaccines regardless of profit. The current national flu vaccine
shortage reveals the need to act.
My bill would steer NIH research dollars towards cutting-edge
technology, remove suffocating price controls, and free American
companies to enter the flu vaccine industry with an investment tax
credit. I urge my colleagues to stand with me in supporting this vital
legislation.
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