I

106TH CONGRESS

2D SESSION H. R. 5219

To amend the Internal Revenue Code of 1986 to allow a credit against

income tax for research related to developing vaccines against widespread

diseases and ensure that such vaccines are affordable and widely distributed.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 20, 2000

Ms. PELOSI (for herself and Ms. DUNN) introduced the following bill; which

was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow a

credit against income tax for research related to developing vaccines against widespread diseases and ensure

that such vaccines are affordable and widely distributed.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Vaccines for the New

5 Millennium Act of 2000’’.
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1 SEC. 2. CREDIT FOR MEDICAL RESEARCH RELATED TO DE2 VELOPING VACCINES AGAINST WIDESPREAD

3 DISEASES.

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to business related credits) is amended by

7 adding at the end the following new section:

8 ‘‘SEC. 45D. CREDIT FOR MEDICAL RESEARCH RELATED TO

9 DEVELOPING VACCINES AGAINST WIDE10 SPREAD DISEASES.

11 ‘‘(a) GENERAL RULE.—For purposes of section 38,

12 the vaccine research credit determined under this section

13 for the taxable year is an amount equal to 30 percent of

14 the qualified vaccine research expenses for the taxable

15 year.

16 ‘‘(b) QUALIFIED VACCINE RESEARCH EXPENSES.—

17 For purposes of this section—

18 ‘‘(1) QUALIFIED VACCINE RESEARCH EX19 PENSES.—

20 ‘‘(A) IN GENERAL.—Except as otherwise

21 provided in this paragraph, the term ‘qualified

22 vaccine research expenses’ means—

23 ‘‘(i) vaccine clinical testing expenses,

24 and
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1 ‘‘(ii) other vaccine research expenses

2 (to the extent not taken into account under

3 this clause for a prior taxable year).

4 ‘‘(B) LIMITATIONS ON OTHER VACCINE RE5 SEARCH EXPENSES.—

6 ‘‘(i) LIMITATION ON EXPENSES

7 TAKEN INTO ACCOUNT.—The amount of

8 other vaccine research expenses with re9 spect to any vaccine or microbicide which

10 may be taken into account under this sec11 tion for any taxable year shall not exceed

12 25 percent of the vaccine clinical testing

13 expenses with respect to such vaccine or

14 microbicide for such year.

15 ‘‘(ii) LIMITATION ON CREDIT.—The

16 amount of credit determined under this

17 section for any taxable year (determined

18 without regard to this clause) with respect

19 to other vaccine research expenses shall be

20 reduced by the amount of credit allowed in

21 any prior taxable year with respect to such

22 expenses under section 41.

23 ‘‘(2) VACCINE CLINICAL TESTING EXPENSES.—

24 ‘‘(A) IN GENERAL.—The term ‘vaccine

25 clinical testing expenses’ means the amounts
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1 which are paid or incurred by the taxpayer dur2 ing the taxable year which would be described

3 in subsection (b) of section 41 if such sub4 section were applied with the modifications set

5 forth in subparagraph (B).

6 ‘‘(B) MODIFICATIONS; INCREASED INCEN7 TIVE FOR CONTRACT RESEARCH PAYMENTS FOR

8 COLLABORATIVE VACCINE CLINICAL TESTING

9 PROJECTS.—For purposes of subparagraph (A),

10 subsection (b) of section 41 shall be applied—

11 ‘‘(i) by substituting ‘vaccine clinical

12 testing’ for ‘qualified research’ each place

13 it appears in paragraphs (2) and (3) of

14 such subsection, and

15 ‘‘(ii) by substituting ‘100 percent’ for

16 ‘65 percent’ in paragraph (3)(A) of such

17 subsection.

18 ‘‘(C) VACCINE CLINICAL TESTING.—The

19 term ‘vaccine clinical testing’ means human

20 clinical testing which is related to the use of

21 any vaccine or microbicide referred to in para22 graph (3)(C) if—

23 ‘‘(i) in the case of human clinical test24 ing conducted in the United States, such
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1 testing is approved by the Federal Food

2 and Drug Administration, or

3 ‘‘(ii) in the case of human clinical

4 testing conducted outside the United

5 States, such testing is approved by the

6 Federal Food and Drug Administration or

7 the appropriate authority of a county in8 cluded in the list under section 802(b)(1)

9 of the Federal Food, Drug, and Cosmetic

10 Act.

11 ‘‘(3) OTHER VACCINE RESEARCH EXPENSES.—

12 ‘‘(A) IN GENERAL.—The term ‘other vac13 cine research expenses’ means the amounts

14 (other than for vaccine clinical testing) which

15 are paid or incurred by the taxpayer during the

16 taxable year or any prior taxable year which

17 would be described in subsection (b) of section

18 41 if such subsection were applied with the

19 modifications set forth in subparagraph (B).

20 ‘‘(B) MODIFICATIONS; INCREASED INCEN21 TIVE FOR CONTRACT RESEARCH PAYMENTS FOR

22 COLLABORATIVE VACCINE RESEARCH

23 PROJECTS.—For purposes of subparagraph (A),

24 subsection (b) of section 41 shall be applied—
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1 ‘‘(i) by substituting ‘vaccine research’

2 for ‘qualified research’ each place it ap3 pears in paragraphs (2) and (3) of such

4 subsection, and

5 ‘‘(ii) by substituting ‘100 percent’ for

6 ‘65 percent’ in paragraph (3)(A) of such

7 subsection.

8 ‘‘(C) VACCINE RESEARCH.—

9 ‘‘(i) IN GENERAL.—The term ‘vaccine

10 research’ means research to develop vac11 cines and microbicides for—

12 ‘‘(I) malaria,

13 ‘‘(II) tuberculosis,

14 ‘‘(III) HIV, or

15 ‘‘(IV) any infectious disease (of a

16 single etiology) that is determined by

17 the Secretary of Health and Human

18 Services (after consultation with the

19 Director of the Center for Disease

20 Control and Prevention and the Ad21 ministrator of the United States

22 Agency for International Develop23 ment) to cause the deaths of over

24 1,000,000 people worldwide each year.
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1 ‘‘(ii) MICROBICIDE.—The term

2 ‘microbicide’ means a substance used topi3 cally for prevention from infection by an

4 identified pathogen.

5 ‘‘(iii) VACCINE.—The term ‘vaccine’

6 means a product using all or portions of

7 the disease-causing organism or nucleic

8 acid sequences for prevention from infec9 tion by an identified pathogen.

10 ‘‘(D) ORDERING RULES.—For purposes of

11 paragraph (1)(B)(ii)—

12 ‘‘(i) other vaccine research expenses

13 shall be taken into account first from the

14 taxable year for which the credit under this

15 section is being determined and then from

16 earlier taxable years beginning with the

17 most recent prior year, and

18 ‘‘(ii) credit shall be treated as allowed

19 under section 41 with respect to any ex20 pense to the extent of the amount that the

21 credit under section 41 would have been

22 reduced but for such expense.

23 ‘‘(4) EXCLUSION FOR AMOUNTS FUNDED BY

24 GRANTS, ETC.—The term ‘qualified vaccine research

25 expenses’ shall not include any amount to the extent
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1 such amount is funded by any grant, contract, or

2 otherwise by another person (or any governmental

3 entity).

4 ‘‘(c) COORDINATION WITH CREDIT FOR INCREASING

5 RESEARCH EXPENDITURES.—

6 ‘‘(1) IN GENERAL.—Except as provided in para7 graph (2), any qualified vaccine research expenses

8 for a taxable year to which an election under this

9 section applies shall not be taken into account for

10 purposes of determining the credit allowable under

11 section 41 for such taxable year.

12 ‘‘(2) EXPENSES INCLUDED IN DETERMINING

13 BASE PERIOD RESEARCH EXPENSES.—Any qualified

14 vaccine research expenses for any taxable year which

15 are qualified research expenses (within the meaning

16 of section 41(b)) shall be taken into account in de17 termining base period research expenses for pur18 poses of applying section 41 to subsequent taxable

19 years.

20 ‘‘(d) SPECIAL RULES.—

21 ‘‘(1) DENIAL OF CREDIT FOR CERTAIN FOR22 EIGN CLINICAL TESTING AND RESEARCH.—

23 ‘‘(A) IN GENERAL.—Except as provided in

24 subparagraph (B), no credit shall be allowed

25 under this section with respect to any clinical
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1 testing or research conducted outside the

2 United States.

3 ‘‘(B) CERTAIN FOREIGN CLINICAL TESTING

4 ELIGIBLE FOR CREDIT.—Subparagraph (A)

5 shall not apply to human clinical testing con6 ducted outside the United States if the Director

7 of the Centers for Disease Control and Preven8 tion determines that there is an insufficient

9 testing population in the United States.

10 ‘‘(C) SPECIAL LIMITATION FOR CORPORA11 TIONS TO WHICH SECTION 936 APPLIES.—No

12 credit shall be allowed under this section with

13 respect to any activities conducted by a cor14 poration to which an election under section 936

15 applies.

16 ‘‘(2) CERTAIN RULES MADE APPLICABLE.—

17 Rules similar to the rules of paragraphs (1) and (2)

18 of section 41(f) shall apply for purposes of this sec19 tion.

20 ‘‘(3) ELECTION.—This section shall apply to

21 any taxpayer for any taxable year only if such tax22 payer elects to have this section apply for such tax23 able year.’’

24 (b) INCLUSION IN GENERAL BUSINESS CREDIT.—
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1 (1) IN GENERAL.—Section 38(b) of such Code

2 is amended by striking ‘‘plus’’ at the end of para3 graph (11), by striking the period at the end of

4 paragraph (12) and inserting ‘‘, plus’’, and by add5 ing at the end the following new paragraph:

6 ‘‘(13) the vaccine research credit determined

7 under section 45D.’’.

8 (2) TRANSITION RULE.—Section 39(d) of such

9 Code is amended by adding at the end the following

10 new paragraph:

11 ‘‘(9) NO CARRYBACK OF SECTION 45D CREDIT

12 BEFORE ENACTMENT.—No portion of the unused

13 business credit for any taxable year which is attrib14 utable to the vaccine research credit determined

15 under section 45D may be carried back to a taxable

16 year ending before the date of the enactment of sec17 tion 45D.’’.

18 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C of

19 such Code is amended by adding at the end the following

20 new subsection:

21 ‘‘(d) CREDIT FOR QUALIFIED VACCINE RESEARCH

22 EXPENSES.—

23 ‘‘(1) IN GENERAL.—No deduction shall be al24 lowed for that portion of the qualified vaccine re25 search expenses (as defined in section 45D(b)) oth-
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1 erwise allowable as a deduction for the taxable year

2 which is equal to the amount of the credit deter3 mined for such taxable year under section 45D(a).

4 ‘‘(2) CERTAIN RULES TO APPLY.—Rules similar

5 to the rules of paragraphs (2), (3), and (4) of sub6 section (c) shall apply for purposes of this sub7 section.’’.

8 (d) DEDUCTION FOR UNUSED PORTION OF CRED9 IT.—Section 196(c) of such Code (defining qualified busi10 ness credits) is amended by striking ‘‘and’’ at the end of

11 paragraph (7), by striking the period at the end of para12 graph (8) and inserting ‘‘, and’’, and by adding at the

13 end the following new paragraph:

14 ‘‘(9) the vaccine research credit determined

15 under section 45D(a) (other than such credit deter16 mined under the rules of section 280C(d)(2)).’’.

17 (e) CLERICAL AMENDMENT.—The table of sections

18 for subpart D of part IV of subchapter A of chapter 1

19 of such Code is amended by adding at the end the fol20 lowing new item:

‘‘Sec. 45D. Credit for medical research related to developing vaccines against widespread diseases.’’.

21 (f) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to expenses paid or incurred after

23 December 31, 2000, in taxable years ending after such

24 date.
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1 (g) DISTRIBUTION OF VACCINES DEVELOPED USING

2 CREDIT.—It is the sense of the Congress that if credit

3 is allowed under section 45D of the Internal Revenue Code

4 of 1986 to any corporation or shareholder of a corporation

5 by reason of vaccine research expenses incurred by the

6 corporation in the development of a vaccine, such corpora7 tion should certify to the Secretary of the Treasury that,

8 within 1 year after that vaccine is first licensed, such cor9 poration will establish a good faith plan utilizing tech10 nology transfer, differential pricing, in-country produc11 tion, or other mechanisms to maximize international ac12 cess to high quality and affordable vaccines. The preceding

13 sentence shall not be construed to waive rights to set

14 prices, patent ownership, or confidentiality of privileged

15 information.

16 (h) STUDY.—The Institute of Medicine shall conduct

17 a study of the effectiveness of the credit under section 45D

18 of the Internal Revenue Code of 1986 in stimulating vac19 cine research. Not later than the date which is 5 years

20 after the date of the enactment of this Act, the Institute

21 of Medicine shall submit to the Congress the results of

22 such study together with any recommendations it may

23 have to improve the effectiveness of such credit in stimu24 lating vaccine research.
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1 SEC. 3. CREDIT FOR CERTAIN SALES OF LIFESAVING VAC2 CINES.

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to business related credits) is amended by

6 adding at the end the following new section:

7 ‘‘SEC. 45E. CREDIT FOR CERTAIN SALES OF LIFESAVING

8 VACCINES.

9 ‘‘(a) IN GENERAL.—For purposes of section 38, the

10 lifesaving vaccine sale credit determined under this section

11 with respect to a taxpayer for the taxable year is an

12 amount equal to the amount of qualified vaccine sales for

13 the taxable year.

14 ‘‘(b) QUALIFIED VACCINE SALES.—For purposes of

15 this section—

16 ‘‘(1) IN GENERAL.—The term ‘qualified vaccine

17 sales’ means the aggregate amount paid to the tax18 payer for a qualified sale.

19 ‘‘(2) QUALIFIED SALE.—

20 ‘‘(A) IN GENERAL.—The term ‘qualified

21 sale’ means a sale of a qualified vaccine—

22 ‘‘(i) to a nonprofit organization or to

23 a government of any foreign country (or

24 instrumentality of such a government), and

25 ‘‘(ii) for distribution in a developing

26 country.
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1 ‘‘(B) DEVELOPING COUNTRY.—For pur2 poses of this paragraph, the term ‘developing

3 country’ means a country which the Secretary

4 determines to be a country with a lower middle

5 income or less (as such term is used by the

6 International Bank for Reconstruction and De7 velopment).

8 ‘‘(3) QUALIFIED VACCINE.—The term ‘qualified

9 vaccine’ means any vaccine and microbicide—

10 ‘‘(A) which is described in section

11 45D(b)(3)(C), and

12 ‘‘(B) which is approved as a new drug

13 after the date of the enactment of this para14 graph by—

15 ‘‘(i) the Food and Drug Administra16 tion,

17 ‘‘(ii) the World Health Organization,

18 or

19 ‘‘(iii) the appropriate authority of a

20 county included in the list under section

21 802(b)(1) of the Federal Food, Drug, and

22 Cosmetic Act.

23 ‘‘(c) LIMIT ON AMOUNT OF CREDIT.—The maximum

24 amount of the credit allowable under subsection (a) with

25 respect to a sale shall not exceed the portion of the limita-
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1 tion amount allocated under subsection (d) with respect

2 to such sale.

3 ‘‘(d) NATIONAL LIMITATION ON AMOUNT OF CRED4 ITS.—

5 ‘‘(1) IN GENERAL.—Except as provided in para6 graph (3), there is a lifesaving vaccine sale credit for

7 each calendar year equal to—

8 ‘‘(A) $100,000,000 for each of years 2002

9 through 2006, and

10 ‘‘(B) $125,000,000 for each of years 2007

11 through 2010.

12 ‘‘(2) ALLOCATION OF LIMITATION.—The limita13 tion amount under paragraph (1) shall be allocated

14 for any calendar year by the Administrator of the

15 United States Agency for International Development

16 among organizations with an application approved

17 by the Administrator. The Administrator shall pre18 scribe the procedures for applications for an alloca19 tion under this subsection and the factors to be

20 taken into account in making such allocations. Such

21 applications shall be made at such time and in such

22 form and manner as the Administrator shall pre23 scribe and shall include a detailed plan for distribu24 tion of the vaccine.
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1 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If

2 the limitation amount under paragraph (1) for any

3 calendar year exceeds the aggregate amount allo4 cated under paragraph (2), such limitation for the

5 following calendar year shall be increased by the

6 amount of such excess. No amount may be carried

7 under the preceding sentence to any calendar year

8 after 2020.

9 ‘‘(e) SPECIAL RULES.—For purposes of this section,

10 rules similar to the rules of section 41(f)(2) shall apply.’’

11 (b) INCLUSION IN GENERAL BUSINESS CREDIT.—

12 (1) IN GENERAL.—Section 38(b) of such Code

13 (relating to current year business credit) is amended

14 by striking ‘‘plus’’ at the end of paragraph (12), by

15 striking the period at the end of paragraph (13) and

16 inserting ‘‘, plus’’, and by adding at the end the fol17 lowing new paragraph:

18 ‘‘(14) the lifesaving vaccine sale credit deter19 mined under section 45E.’’.

20 (2) TRANSITION RULE.—Section 39(d) of such

21 Code (relating to transitional rules) is amended by

22 adding at the end the following new paragraph:

23 ‘‘(10) NO CARRYBACK OF SECTION 45E CREDIT

24 BEFORE ENACTMENT.—No portion of the unused

25 business credit for any taxable year which is attrib-
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1 utable to the lifesaving vaccine sale credit deter2 mined under section 45E may be carried back to a

3 taxable year ending before the date of the enactment

4 of section 45E.’’.

5 (c) CLERICAL AMENDMENT.—The table of sections

6 for subpart D of part IV of subchapter A of chapter 1

7 of such Code is amended by adding at the end the fol8 lowing new item:

‘‘Sec. 45E. Credit for certain sales of lifesaving vaccines.’’.

9 (d) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to sales of vaccines after December

11 31, 2001, in taxable years ending after such date.

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