A bill to target Federal funding for research and development, 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.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Flu Vaccine Incentive Act of 2005'' 
or the ``FLU-VIA''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) 30 years ago, more than a dozen companies produced the 
        influenza vaccine in the United States. As of 2004, only 2 
        companies make the vaccine for the United States.
            (2) Currently, the influenza vaccine is grown in eggs 
        through a process that takes approximately 6 months and 
        consumes tens of thousands of eggs.
            (3) Companies are developing new technologies for the 
        faster and safer production of the influenza vaccine. For 
        example, one manufacturer is testing a process that relies on 
        cell lines from silk moths, a technique that promises to shave 
        the production time by at least a month and reduce the costs 
        significantly.
            (4) The United States should do all that it can to 
        encourage research and development of new technologies for the 
        production of influenza vaccines.

SEC. 3. TARGETING APPROPRIATED FUNDS FOR RESEARCH AND DEVELOPMENT.

    Effective as if included in the enactment of the Consolidated 
Appropriations Act, 2005 (Public Law 108-447), under the heading 
relating to ``Public Health and Social Services Emergency Fund'' under 
title II of division F, strike ``, and if determined necessary by the 
Secretary, the purchase of influenza vaccine,''.

SEC. 4. ELIMINATION OF PRICE CAP FOR THE PURCHASE OF INFLUENZA 
              VACCINES.

    (a) In General.--
            (1) Vaccines for children program.--Section 1928(d)(3) of 
        the Social Security Act (42 U.S.C. 1396s(d)(3)) is amended--
                    (A) in subparagraph (B), by striking ``With'' and 
                inserting ``Except as provided in subparagraph (D), 
                with''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) Nonapplication to influenza vaccines.--With 
                respect to contracts entered into for the purchase of a 
                pediatric vaccine that is an influenza vaccine, and to 
                the maximum extent practicable, with respect to any 
                other contracts entered into by the Secretary for the 
                purchase of an influenza vaccine, the price for the 
                purchase of such vaccine shall be established without 
                regard to subparagraph (B).''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to contracts entered into on or after the date of 
        enactment of this Act.
    (b) Application to Purchases for Other Federal Programs.--Section 
1928(d)(3)(D) of the Social Security Act (42 U.S.C. 1396s(d)(3)(D)), as 
amended by subsection (a), shall apply with respect to the purchase of 
an influenza vaccine by any Federal agency and in lieu of the price 
that would otherwise apply to such a purchase under the schedule for 
the purchase of drugs by the Veterans Administration under section 8126 
of title 38, United States Code, under agreements negotiated by the 
Secretary of Health and Human Services under section 340B of the Public 
Health Service Act (42 U.S.C. 256b), or otherwise.

SEC. 5. INCENTIVES FOR THE CONSTRUCTION OF INFLUENZA VACCINE 
              MANUFACTURING FACILITIES.

    (a) Influenza Vaccine Manufacturing Facilities Investment Tax 
Credit.--
            (1) Allowance of credit.--Section 46 of the Internal 
        Revenue Code of 1986 (relating to amount of investment credit) 
        is amended by striking ``and'' at the end of paragraph (1), by 
        striking the period at the end of paragraph (2) and inserting 
        ``, and'', and by adding at the end the following new 
        paragraph:
            ``(3) the influenza vaccine manufacturing facilities 
        investment credit.''.
            (2) Amount of credit.--Section 48 of such Code is amended 
        by adding at the end the following new subsection:
    ``(c) Influenza Vaccine Manufacturing Facilities Investment 
Credit.--
            ``(1) In general.--For purposes of section 46, the 
        influenza vaccine manufacturing facilities investment credit 
        for any taxable year is an amount equal to 20 percent of the 
        qualified investment for such taxable year.
            ``(2) Qualified investment.--For purposes of paragraph (1), 
        the qualified investment for any taxable year is the basis of 
        each influenza vaccine manufacturing facilities property placed 
        in service by the taxpayer during such taxable year.
            ``(3) Influenza vaccine manufacturing facilities 
        property.--For purposes of this subsection, the term `influenza 
        vaccine manufacturing facilities property' means real and 
        tangible personal property--
                    ``(A)(i) the original use of which commences with 
                the taxpayer, or
                    ``(ii) which is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) which is depreciable under section 167,
                    ``(C) which is used for the manufacture, 
                distribution, or research and development of influenza 
                vaccines, and
                    ``(D) which is in compliance with any standards and 
                regulations which are promulgated by the Food and Drug 
                Administration, the Occupational Safety and Health 
                Administration, or the Environmental Protection Agency 
                and which are applicable to such property.
            ``(4) Certain progress expenditure rules made applicable.--
        Rules similar to rules of subsections (c)(4) and (d) of section 
        46 (as in effect on the day before the date of the enactment of 
        the Revenue Reconciliation Act of 1990) shall apply for 
        purposes of this subsection.
            ``(5) Termination.--This subsection shall not apply to any 
        property placed in service after December 31, 2014.''.
    (b) Technical Amendments.--
            (1) Subparagraph (C) of section 49(a)(1) of the Internal 
        Revenue Code of 1986 is amended by striking ``and'' at the end 
        of clause (ii), by striking the period at the end of clause 
        (iii) and inserting
        ``, and'', and by adding at the end the following new clause:
                            ``(iv) the basis of any influenza vaccine 
                        manufacturing facilities property.''.
            (2) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by inserting ``or 48(c)(4)'' before the period.
            (3)(A) The section heading for section 48 of such Code is 
        amended to read as follows:

``SEC. 48. OTHER CREDITS.''.

            (B) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the item relating to section 48 and inserting the following:

``Sec. 48. Other credits.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2004, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of enactment of 
the Revenue Reconciliation Act of 1990).

Summary: Flu Vaccine Incentive Act of 2005 or FLU-VIA - Rescinds the authority of the Secretary of Health and Human Services under the Consolidated Appropriations Act, 2005, to make certain purchases of inflluenza vaccine. Amends title XIX (Medicaid) of the Social Security Act to exempt contracts entered into by the Secretary for the purchase of a pediatric influenza vaccine and other vaccines from certain price restrictions otherwise applicable to such contracts. Extends such exemption to any other Federal agency that purchases an influenza vaccine. Amends the Internal Revenue Code to allow a tax credit for investment in influenza vaccine manufacturing facilities.