[Congressional Record Volume 151, Number 115 (Wednesday, September 14, 2005)]
[Senate]
[Pages S10039-S10044]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself and Mr. Lugar):
  S. 1698. A bill to accelerate efforts to develop vaccines for 
diseases primarily affecting developing countries and for other 
purposes; to the Committee on Finance.
  Mr. KERRY. Mr. President, this week world leaders are meeting at the 
United Nations to reaffirm the commitments made five years ago under 
the United Nations Millennium Declaration, including the commitment to 
halt and begin to reverse by the year 2015 the spread of HIV/AIDs, 
malaria, and other major diseases that claim the lives of millions of 
people around the world every year. We still have a long way to go if 
we are going to meet this challenge.
  AIDS, which has already claimed the lives of 20 million people, 
continues to be the leading cause of premature death in sub-Saharan 
Africa. An estimated 39 million people worldwide are infected with HIV. 
Last year alone, 4.9 million people were newly infected with HIV, and 
3.1 million died. For years, the epidemic was focused on sub-Saharan 
Africa, but now HIV is spreading fastest in Central Europe and in parts 
of Asia.
  Although the AIDS pandemic has gripped the world's notice, other 
diseases such as malaria and tuberculosis have drawn less attention--
but they too are deadly, particularly for those in the world's poorest 
countries. Malaria claims the lives of a million people annually, many 
of them young children; ninety percent of these deaths occur among 
people living in sub-Saharan Africa. Tuberculosis, once thought to be 
eradicated, has reemerged in new and more drug resistant strains. An 
estimated 1.7 million people now die annually from TB. Because those 
living

[[Page S10040]]

with HIV or AIDS are particularly vulnerable, the number of TB cases 
has been growing rapidly in sub-Saharan Africa and Central Europe.
  Taken together HIV/AIDS, TB and malaria kill over 5 million people 
annually. A human crisis of this proportion demands that we respond 
with urgency and thoughtfulness. We must continue to support robust 
prevention, treatment and care programs. But we must also recognize 
that vaccines are the most effective weapons in the arsenal of modern 
medicine to stop the threat of AIDS and other infectious diseases that 
are decimating the developing world. Pharmaceutical and biotechnology 
companies, however, are reluctant to invest in research for vaccines 
for these diseases because they fear that the market will not be 
lucrative enough to cover the costs of research and development
  The bill that I am introducing today, Vaccines for the New Millennium 
Act of 2005, is designed to address this problem by providing 
incentives for these companies to accelerate their efforts to develop 
vaccines and microbicides to prevent HIV/AIDS, TB, malaria and other 
neglected diseases. It builds upon legislation that I introduced in 
2001 with Senator Frist. I am pleased that the Chairman of the Foreign 
Relations Committee, Senator Lugar, is joining me in introducing this 
new, expanded bill.
  The bill provides a variety of economic incentives. First, it 
mandates that the Secretary of the Treasury enter into negotiations 
with the World Bank, the International Development Association, the 
Global Alliance for Vaccines and Immunizations, and other interested 
parties in order to establish advanced market commitments, AMCs, for 
the purchase of vaccines and microbicides to combat neglected diseases. 
Research has shown that the major obstacle to the development of 
vaccines for these diseases is the absence of a market because these 
diseases hit hardest in poor countries that cannot afford to buy the 
vaccines. Advanced market commitments AMCs are designed to remove this 
obstacle by creating the market ahead of time. AMCs would be legally 
binding contracts to purchase a vaccine or microbicide at a fair market 
price for a guaranteed number of treatments, thereby creating a market 
incentive for a company to invest in the development and production of 
vaccines for these diseases. The international framework for the AMCs 
would also include clearly defined requirements for eligible vaccines 
to ensure that they are safe and effective as well as clearly defined 
and transparent rules of competition. The bill also mandates that the 
Secretary establish a purchase fund in the Treasury as soon as a 
vaccine to combat one of these diseases is available.
  Second, the bill supplements the market incentive with a variety of 
tax incentives designed to provide appropriate and equitable incentives 
to both large pharmaceutical and small private sector companies to 
stimulate vaccine development. The bill provides a 30 percent tax 
credit each year on qualified research expenses to develop microbicides 
for HIV and vaccines for HIV, TB, malaria and other neglected diseases 
that kill more than 1 million people annually. This is an expansion of 
the existing R&D tax credit and can be applied to clinical trials 
outside of the United States, since the majority of those infected with 
these diseases are beyond our borders.
  It provides a refundable tax credit to small biotechnology companies 
based on the amount of qualified research that they do in a given year. 
This credit is designed to stimulate research among the firms that are 
the most innovative and to ensure that assistance is given to those 
small companies that need it the most. Increased research efforts by 
these firms could be instrumental to the effort to develop effective 
vaccines for neglected diseases, particularly for HIV/AIDS.
  And it provides a 100 percent tax credit on contracts and other 
arrangements for research and development of these vaccines and 
microbicides. This credit, which is an increase over the 65 percent 
credit now in the tax code, is designed to serve as an incentive to 
larger pharmaceutical companies to work hand in hand with the smaller 
biotech companies to pick up the pace of vaccine development.
  Once vaccines are developed, it is imperative that they be widely 
distributed. The bill that I am introducing today with Senator Lugar 
also addresses the distribution side of the equation. It provides a 100 
percent tax credit to companies on the sales of new vaccines and 
microbicides as long as those sales are made to a qualified 
international health organization or foreign government for 
distribution in developing countries
  Finally, the bill sets up a pilot program under the Small Business 
Act to encourage the development of vaccines and microbicides by 
eligible companies under the auspices of the Small Business Innovation 
Research, SBIR, and the Small Business Technology Transfer, STTR, 
programs in US government agencies with a global health or disease 
prevention mission. Under this pilot program, these agencies have new 
authority to undertake outreach activities to eligible biotech firms 
and other small business to promote the objectives of the pilot 
program.
  In recent years, a number of pharmaceutical companies have taken 
steps to help in the treatment of those infected with AIDS by providing 
life-extending therapies to the developing world at reduced costs. 
These drugs are critically important but the war against AIDS cannot be 
won unless we develop vaccines against the HIV virus and other 
neglected diseases. The pharmaceutical and biotech companies hold the 
key
  Many steps need to be taken in the war against these diseases. This 
bill focuses on only one area but a critically important one: vaccine 
development and distribution. If the public and private sectors work 
together with energy and commitment, I believe we can develop the 
vaccines, and once developed, we will win the war against these deadly 
diseases that victimize so many in the developing world.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection the bill was ordered to be printed in the 
Record as follows:

                                S. 1698

       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 2005''.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) AIDS.--The term ``AIDS'' has the meaning given the term 
     in section 104A(g) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2151b-2).
       (2) Appropriate congressional committees.--The term 
     ``appropriate congressional committees'' means the Committee 
     on Appropriations and the Committee on Foreign Relations of 
     the Senate and the Committee on Appropriations and the 
     Committee on International Relations of the House of 
     Representatives.
       (3) Developing country.--The term ``developing country'' 
     means a country that the World Bank determines to be a 
     country with a lower middle income or less.
       (4) HIV/AIDS.--The term ``HIV/AIDS'' has the meaning given 
     the term in section 104A(g) of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2151b-2).
       (5) Global alliance for vaccines and immunizations.--The 
     term ``Global Alliance for Vaccines and Immunizations'' means 
     the public-private partnership launched in 2000 for the 
     purpose of saving the lives of children and protecting the 
     health of all people through the widespread use of vaccines.
       (6) Neglected disease.--The term ``neglected disease'' 
     means--
       (A) HIV/AIDS;
       (B) malaria;
       (C) tuberculosis; or
       (D) any infectious disease (of a single etiology), which, 
     according to the World Health Organization, causes more than 
     1,000,000 deaths each year in developing countries.
       (7) World bank.--The term ``World Bank'' means the 
     International Bank for Reconstruction and Development.

     SEC. 3. FINDINGS.

       Congress makes the following findings:
       (1) Immunization is cheap, reliable, and effective, and has 
     made a profound impact on global health, in both rich and 
     poor countries.
       (2) During the 20th century, global immunization efforts 
     have successfully led to the eradication of smallpox and the 
     elimination of polio from the Western Hemisphere, Europe, and 
     most of Asia. Vaccines for diseases such as measles and 
     tetanus have dramatically reduced childhood mortality 
     worldwide, and vaccines for diseases such as influenza, 
     pneumonia, and hepatitis help prevent sickness and death of 
     adults as well as children.
       (3) According to the World Health Organization, combined, 
     AIDS, tuberculosis, and malaria kill more than 5,000,000 
     people a year, most of whom are in the developing

[[Page S10041]]

     world, yet there are no vaccines for these diseases.
       (4) It is estimated that just 10 percent of the world's 
     research and development on health is targeted on diseases 
     affecting 90 percent of the world's population.
       (5) Economic disincentives result in little private sector 
     investment in vaccines for neglected diseases, a situation 
     which disproportionately affects populations in developing 
     countries.
       (6) Of more than $100,000,000,000 spent on health research 
     and development across the world, only $6,000,000,000 is 
     spent each year on diseases that are specific to developing 
     countries, most of which is from public and philanthropic 
     sources.
       (7) Infants, children, and adolescents are among the 
     populations hardest hit by AIDS and malaria, but they are at 
     risk of being left behind in the search for effective 
     vaccines against such diseases.
       (8) Providing a broad range of economic incentives to 
     increase private sector research on neglected diseases, 
     including increased public and private sector funding for 
     research and development, guaranteed markets, tax credits, 
     and improved regulatory procedures would increase the number 
     of products in development and the likelihood of finding 
     effective vaccines for such diseases.

     SEC. 4. SENSE OF CONGRESS ON SUPPORT FOR NEGLECTED DISEASES.

       It is the sense of Congress that--
       (1) the President should continue to encourage efforts to 
     support the Global HIV Vaccine Enterprise, a virtual 
     consortium of scientists and organizations committed to 
     accelerating the development of an effective HIV vaccine;
       (2) the United States should work with the Global Fund to 
     Fight AIDS, Tuberculosis and Malaria, the Joint United 
     Nations Programme on HIV/AIDS (``UNAIDS''), the World Health 
     Organization, the International AIDS Vaccine Initiative, and 
     the World Bank to ensure that all countries heavily affected 
     by the HIV/AIDS pandemic have national AIDS vaccine plans;
       (3) the United States should support and encourage the 
     carrying out of the agreements of the Group of 8 made at the 
     2005 Summit at Gleneagles, Scotland, to increase direct 
     investment and create market incentives, including through 
     public-private partnerships and advance market commitments, 
     to complement public research in the development of vaccines, 
     microbicides, and drugs for HIV/AIDS, malaria, tuberculosis, 
     and other neglected diseases;
       (4) the United States should support testing of promising 
     vaccines in infants, children, and adolescents as early as is 
     medically and ethically appropriate, in order to avoid 
     significant delays in the availability of pediatric vaccines 
     at the cost of thousands of lives;
       (5) the United States should continue supporting the work 
     of the Global Alliance for Vaccines and Immunizations and the 
     Global Fund for Children's Vaccines as appropriate and 
     effective vehicles to purchase and distribute vaccines for 
     neglected diseases at an affordable price once such vaccines 
     are discovered in order to distribute them to the developing 
     world; and
       (6) the United States should work with others in the 
     international community to address the multiple obstacles to 
     the development of vaccines for neglected diseases including 
     scientific barriers, insufficient economic incentives, 
     protracted regulatory procedures, lack of delivery systems 
     for products once developed, liability risks, and 
     intellectual property rights.

     SEC. 5. PUBLIC-PRIVATE PARTNERSHIPS.

       (a) Findings.--Congress makes the following findings:
       (1) Creative partnerships between governments and 
     organizations in the private sector (including foundations, 
     universities, corporations including pharmaceutical companies 
     and biotechnology firms, community-based organizations and 
     other nongovernmental organizations) are playing a critical 
     role in the area of global health, particularly in the fight 
     against neglected diseases, including HIV/AIDS, tuberculosis, 
     and malaria.
       (2) Public-private sector partnerships increase local and 
     international capacities to improve the delivery of health 
     services in developing countries and to accelerate research 
     and development of vaccines and other preventive medical 
     technologies essential to combating infectious diseases that 
     disproportionately kill people in developing countries.
       (3) These partnerships maximize the unique capabilities of 
     each sector while combining financial and other resources, 
     scientific knowledge, and expertise toward common goals which 
     cannot be achieved by either sector alone.
       (4) Public-private partnerships such as the International 
     AIDS Vaccine Initiative, the Malaria Vaccine Initiative, and 
     the Global TB Drug Facility are playing cutting edge roles in 
     the efforts to develop vaccines for these diseases.
       (5) Public-private partnerships serve as incentives to the 
     research and development of vaccines for neglected diseases 
     by providing biotechnology companies, which often have no 
     experience in developing countries, with technical assistance 
     and on the ground support for clinical trials of the vaccine 
     through the various stages of development.
       (6) Sustaining existing public-private partnerships and 
     building new ones where needed are essential to the success 
     of the efforts by the United States and others in the 
     international community to find a cure for these and other 
     neglected diseases.
       (b) Sense of Congress.--It is the sense of Congress that--
       (1) the sustainment and promotion of public-private 
     partnerships must be a central element of the strategy 
     pursued by the United States to create effective incentives 
     for the development of vaccines and other preventive medical 
     technologies for neglected diseases debilitating the 
     developing world; and
       (2) the United States government should take steps to 
     address the obstacles to the development of these 
     technologies by increasing investment in research and 
     development and establishing market and other incentives.
       (c) Policy.--It is the policy of the United States to 
     accelerate research and development for vaccines and 
     microbicides for neglected diseases by substantially 
     increasing funding for public-private partnerships that 
     invest directly in research, such as the International AIDS 
     Vaccine Initiative, the Malaria Vaccine Initiative, and the 
     Global TB Drug Facility, and for partnerships such as the 
     Vaccine Fund that incentivize the development of new vaccines 
     by purchase existing vaccines.

     SEC. 6. COMPREHENSIVE STRATEGY FOR ACCELERATING THE 
                   DEVELOPMENT OF VACCINES FOR NEGLECTED DISEASES.

       (a) Requirement for Strategy.--The President shall 
     establish a comprehensive strategy to accelerate efforts to 
     develop vaccines and microbicides for neglected diseases such 
     as HIV/AIDS, malaria, and tuberculosis. Such strategy shall--
       (1) expand public-private partnerships and the leveraging 
     of resources from other countries and the private sector;
       (2) include initiatives to create economic incentives for 
     the research, development, and manufacturing of vaccines for 
     HIV/AIDS, tuberculosis, malaria, and other neglected 
     diseases;
       (3) include the negotiation of advanced market commitments;
       (4) address intellectual property issues surrounding the 
     development of vaccines and microbicidies for neglected 
     diseases;
       (5) maximize United States capabilities to support clinical 
     trials of vaccines and microbicidies in developing countries;
       (6) address the issue of regulatory approval of such 
     vaccines, whether through the Commissioner of the Food and 
     Drug Administration, or the World Health Organization or 
     another internally-recognized and agreed upon entity;
       (7) expand the purchase and delivery of existing vaccines; 
     and
       (8) address the challenges of delivering vaccines in 
     developing countries in advance so as to minimize historical 
     delays in access once vaccines are available.
       (b) Report.--Not later than 270 days after the date of 
     enactment of this Act, the President shall submit to the 
     appropriate congressional committees a report setting forth 
     the strategy described in subsection (a) and the steps to 
     implement such strategy.

     SEC. 7. ADVANCED MARKET COMMITMENTS.

       (a) Purpose.--The purpose of this section is to create 
     incentives for the private sector to invest in research, 
     development, and manufacturing of vaccines for neglected 
     diseases by creating a competitive market for future vaccines 
     through advanced market commitments.
       (b) Authority to Negotiate.--
       (1) In general.--The Secretary of the Treasury shall enter 
     into negotiations with the appropriate officials of the World 
     Bank, the International Development Association, and Global 
     Alliance for Vaccines and Immunizations, the member nations 
     of such entities, and other interested parties for the 
     purpose of establishing advanced market commitments to 
     purchase vaccines and microbicides to combat neglected 
     diseases.
       (2) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary shall submit to the 
     appropriate congressional committees a report on the status 
     of the negotiations to create advanced market commitments 
     under this section.
       (c) Requirements.--The Secretary of the Treasury shall work 
     with the entities referred to in subsection (b) to ensure 
     that there is an international framework for the 
     establishment and implementation of advanced market 
     commitments and that such commitments include--
       (1) legally binding contracts for product purchase that 
     include a fair market price for a guaranteed number of 
     treatments to ensure that the market incentive is sufficient;
       (2) clearly defined and transparent rules of competition 
     for qualified developers and suppliers of the product;
       (3) clearly defined requirements for eligible vaccines to 
     ensure that they are safe and effective;
       (4) dispute settlement mechanisms; and
       (5) sufficient flexibility to enable the contracts to be 
     adjusted in accord with new information related to projected 
     market size and other factors while still maintaining the 
     purchase commitment at a fair price.
       (d) Trust Fund.--
       (1) Authority to establish.--On the date that the Secretary 
     of the Treasury determines that a vaccine to combat a 
     neglected disease is available for purchase, the Secretary 
     shall establish in the Treasury of the United States a fund 
     to be known as the

[[Page S10042]]

     Lifesaving Vaccine Purchase Fund consisting of amounts 
     appropriated pursuant to paragraph (4).
       (2) Investment of fund.--Amounts in such 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.
       (3) Use of fund.--The Secretary is authorized to expend 
     amounts in such Fund for the purchase of a vaccine to combat 
     a neglected disease pursuant to an advanced market commitment 
     undertaken on behalf of the Government of the United States.
       (4) Authority to accept contributions.--The President may 
     accept and use in furtherance of the purposes of this Act 
     contributions from nongovernmental organizations, 
     international health agencies, the United Nations, the Global 
     Fund to Fight AIDS, Tuberculosis and Malaria, private 
     nonprofit organizations that are organized to support public 
     health research and programs, and any other organizations 
     willing to contribute to the Lifesaving Vaccine Purchase 
     Fund.
       (5) Appropriations.--
       (A) In general.--For each fiscal year beginning after the 
     date that the Secretary determines that a vaccine to combat a 
     neglected disease is available for purchase, there are 
     authorized to be appropriated out of any funds in the 
     Treasury not otherwise appropriated such sums as may be 
     necessary to carry out the purposes of such Fund.
       (B) Transfer of funds.--The Secretary shall transfer the 
     amount appropriated under paragraph (1) for a fiscal year to 
     such Fund.
       (C) Availability.--Amounts appropriated pursuant to this 
     paragraph shall remain available until expended without 
     fiscal year limitation.

     SEC. 8. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING 
                   VACCINES AGAINST NEGLECTED 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. 45J. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING 
                   VACCINES FOR NEGLECTED 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) HIV/AIDS (as that term is defined in section 104A(g) 
     of the Foreign Assistance Act of 1961 (22 U.S.C. 21516-2)),
       ``(B) malaria,
       ``(C) tuberculosis, or
       ``(D) any infectious disease (of a single etiology) which, 
     according to the World Health Organization, causes more than 
     1,000,000 human deaths each year in developing countries.
       ``(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.--Section 38(b) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``plus'' at the end of paragraph (18), by striking the period 
     at the end of paragraph (19) and inserting ``, plus'', and by 
     adding at the end the following new paragraph:
       ``(20) the vaccine research credit determined under section 
     45J.''.
       (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:
       ``(e) 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 45J(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 45J(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 (11), by striking the period at the end of 
     paragraph (12) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(13) the vaccine research credit determined under section 
     45J(a) (other than such credit determined under the rules of 
     section 280C(e)(2)).''.
       (e) Technical Amendments.--
       (1) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``or from section 45J(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. 45J. 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 beginning after December 31, 
     2005.

[[Page S10043]]

       (g) Study.--
       (1) In general.--The National Institutes of Health shall 
     conduct a study of the extent to which the credit under 
     section 45J 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. 9. 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 4, is 
     amended by adding at the end the following new section:

     ``SEC. 45K. 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 45J(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 2006 through 2010, and
       ``(B) $125,000,000 for each of years 2011 through 2012.
       ``(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 2024.
       ``(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.--Section 38(b) of 
     the Internal Revenue Code of 1986 (relating to current year 
     business credit), as amended by section 4(b), is amended by 
     striking ``plus'' at the end of paragraph (19), by striking 
     the period at the end of paragraph (20) and inserting ``, 
     plus'', and by adding at the end the following new paragraph:
       ``(21) the lifesaving vaccine sale credit determined under 
     section 45K.''.
       (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. 45K. 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, 2005, in 
     taxable years ending after such date.

     SEC. 10. SBIR AND STTR PROGRAM FUNDING FOR VACCINE 
                   DEVELOPMENT.

       (a) Pilot Program.--Section 9 of the Small Business Act (15 
     U.S.C. 638) is amended by adding at the end the following:
       ``(x) Required Expenditures for the Development of Vaccines 
     for Neglected Diseases.--
       ``(1) SBIR expenditures.--Each agency required to make 
     expenditures under subsection (f)(1) or under subsection 
     (n)(1), that is determined by the Administrator to have a 
     mission related to global health or disease prevention shall 
     expend with small business concerns, in addition to any 
     amounts required to be expended under subsections (f) and 
     (n), not less than $10,000,000 for fiscal year 2006 and each 
     fiscal year thereafter, specifically in connection with SBIR 
     and STTR programs which meet the requirements of this 
     section, policy directives, and regulations to carry out this 
     section, to carry out the pilot program established under 
     this subsection.
       ``(2) Pilot program.--During the 4-year period beginning on 
     the date of enactment of the Vaccines for the New Millennium 
     Act of 2005, the Administrator shall establish and carry out 
     a program to encourage the development of vaccines and 
     microbicides to combat a neglected disease, including 
     outreach activities to raise awareness of such program.
       ``(3) Administrative costs.--The limitations in subsection 
     (f)(2) and (n)(2) shall not apply to agency expenditures 
     under the pilot program established under this subsection.
       ``(4) Report.--Six months before the date of expiration of 
     the pilot program established under this subsection, the 
     Administrator shall submit to the Committee on Small Business 
     and Entrepreneurship of the Senate and the Committee on Small 
     Business of the House of Representatives a report containing 
     an assessment of whether the pilot program is meeting the 
     objective of providing incentives to small business concerns 
     to research the development of vaccines and microbicides to 
     combat a neglected disease, and an accounting of the 
     expenditures for the pilot program.
       ``(5) Definitions.--As used in this subsection and 
     subsection (j), the terms `neglected disease' and `developing 
     country' have the same meanings as in section 2 of the 
     Vaccines for the New Millennium Act of 2005.''.
       (b) Policy Objectives.--Section 9(j) of the Small Business 
     Act (15 U.S.C. 638(j)) is amended by adding at the end the 
     following:
       ``(4) Additional modifications for the development of 
     vaccines for a neglected disease.--Not later than 90 days 
     after the date of enactment of the Vaccines for the New 
     Millennium Act of 2005, the Administrator shall modify the 
     policy directives issued pursuant to this subsection to 
     ensure that agencies participating in the SBIR and STTR 
     programs develop an action plan for implementing the pilot 
     program for the development of vaccines and microbicides to 
     combat a neglected disease under subsection (x), including 
     outreach to raise awareness of the pilot program.''.
  Mr. LUGAR. Mr. President, I rise to introduce with Senator Kerry the 
Vaccines for a New Millennium Act of 2005.
  The AIDS crisis is devastating sub-Saharan Africa. According to the 
latest figures from UNAIDS, there are approximately 40 million people 
living with HIV/AIDS around the world. An estimated 4.9 million people 
were newly infected last year. This means that every day, some 14,000 
people contract HIV/AIDS. Last year, an estimated 3 million people died 
from AIDS.
  The AIDS crisis in sub-Saharan Africa has profound implications for 
political stability, development, and human welfare that extend far 
beyond the region. In addition to the current crisis in Africa, public 
health experts warn of a ``second wave'' of countries on the verge of 
potential AIDS crises, such as China, India, Russia, Nigeria, and 
Ethiopia.
  Despite efforts through programs like the President's Emergency Plan 
for AIDS Relief PEPFAR, the Global Fund to Fight AIDS, Tuberculosis, 
and Malaria, and the Bill and Melinda Gates Foundation to treat those 
living with HIV/AIDS and to prevent new infections, the disease is 
outpacing us. While prevention programs are critical in the struggle to 
slow the spread of the disease, over the long term, the most effective 
way to defeat this pandemic is through the development of an effective 
HIV vaccine.
  In addition to AIDS, malaria and tuberculosis continue to kill many 
in the developing world. More than 300 million people are infected with 
malaria annually, and an estimated 1 million people--mostly children 
under the age of five--die from malaria. Combined, AIDS, tuberculosis, 
and malaria kill an estimated 5 million people a year. Yet

[[Page S10044]]

there are no vaccines for these diseases. While we must remain 
committed to current prevention and treatment programs, we must also 
look toward the future to see what hope science has for preventing the 
spread of these diseases.
  Historically, vaccines have led to some of the greatest achievements 
in public health and are among the most cost-effective health 
interventions. During the 20th century, global immunization efforts 
have led to the eradication of smallpox and the elimination of polio 
from the Western Hemisphere, Europe and most of Asia. Vaccines for 
diseases such as measles and tetanus have dramatically reduced 
childhood mortality worldwide, and vaccines for diseases such as 
influenza, pneumonia, and hepatitis now help prevent sickness and death 
of adults, too.
  Vaccines for these diseases would play an important role in saving 
lives in developing countries. Governments, private foundations, and 
the private sector have made enormous strides. Public-private 
partnerships have also contributed to scientific advances in this area. 
However, much more needs to be done.
  Because of the promise that vaccines hold, Senator Kerry and I are 
introducing the ``Vaccines for the New Millennium Act of 2005.'' 
Representative Pete Visclosky is introducing a companion bill in the 
House of Representatives. Our bill would require the United States to 
develop a comprehensive strategy to accelerate research and development 
in vaccines for HIV/AIDS, tuberculosis, malaria, and other infectious 
diseases that are major killers in the developing world. The strategy 
would require an increase in public-private partnerships, whereby 
public entities such as governments, team up with companies or private 
foundations to conduct research or vaccine trials. The bill would 
require the United States government to commit to purchase vaccines for 
these diseases once they are developed through ``advance market 
commitments.'' Finally, the legislation would create a tax credit for 
companies that invest in research and development for vaccines for 
these diseases.
  I am hopeful that Senators will join Senator Kerry and me in 
supporting this legislation.
                                 ______