II 

109TH CONGRESS 

1ST SESSION S. 1698 

To accelerate efforts to develop vaccines for diseases primarily affecting 

developing countries and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 14, 2005 

Mr. KERRY (for himself and Mr. LUGAR) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To accelerate efforts to develop vaccines for diseases primarily affecting developing countries and for other purposes. 

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 2005’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act: 

8 (1) AIDS.—The term ‘‘AIDS’’ has the meaning 

9 given the term in section 104A(g) of the Foreign As10 sistance Act of 1961 (22 U.S.C. 2151b–2). 
2 

•S 1698 IS

1 (2) APPROPRIATE CONGRESSIONAL COMMIT2 TEES.—The term ‘‘appropriate congressional com3 mittees’’ means the Committee on Appropriations 

4 and the Committee on Foreign Relations of the Sen5 ate and the Committee on Appropriations and the 

6 Committee on International Relations of the House 

7 of Representatives. 

8 (3) DEVELOPING COUNTRY.—The term ‘‘devel9 oping country’’ means a country that the World 

10 Bank determines to be a country with a lower mid11 dle income or less. 

12 (4) HIV/AIDS.—The term ‘‘HIV/AIDS’’ has 

13 the meaning given the term in section 104A(g) of 

14 the Foreign Assistance Act of 1961 (22 U.S.C. 

15 2151b–2). 

16 (5) GLOBAL ALLIANCE FOR VACCINES AND IM17 MUNIZATIONS.—The term ‘‘Global Alliance for Vac18 cines and Immunizations’’ means the public-private 

19 partnership launched in 2000 for the purpose of sav20 ing the lives of children and protecting the health of 

21 all people through the widespread use of vaccines. 

22 (6) NEGLECTED DISEASE.—The term ‘‘ne23 glected disease’’ means— 

24 (A) HIV/AIDS; 

25 (B) malaria; 
3 

•S 1698 IS

1 (C) tuberculosis; or 

2 (D) any infectious disease (of a single eti3 ology), which, according to the World Health 

4 Organization, causes more than 1,000,000 

5 deaths each year in developing countries. 

6 (7) WORLD BANK.—The term ‘‘World Bank’’ 

7 means the International Bank for Reconstruction 

8 and Development. 

9 SEC. 3. FINDINGS. 

10 Congress makes the following findings: 

11 (1) Immunization is cheap, reliable, and effec12 tive, and has made a profound impact on global 

13 health, in both rich and poor countries. 

14 (2) During the 20th century, global immuniza15 tion efforts have successfully led to the eradication 

16 of smallpox and the elimination of polio from the 

17 Western Hemisphere, Europe, and most of Asia. 

18 Vaccines for diseases such as measles and tetanus 

19 have dramatically reduced childhood mortality world20 wide, and vaccines for diseases such as influenza, 

21 pneumonia, and hepatitis help prevent sickness and 

22 death of adults as well as children. 

23 (3) According to the World Health Organiza24 tion, combined, AIDS, tuberculosis, and malaria kill 

25 more than 5,000,000 people a year, most of whom 
4 

•S 1698 IS

1 are in the developing world, yet there are no vac2 cines for these diseases. 

3 (4) It is estimated that just 10 percent of the 

4 world’s research and development on health is tar5 geted on diseases affecting 90 percent of the world’s 

6 population. 

7 (5) Economic disincentives result in little pri8 vate sector investment in vaccines for neglected dis9 eases, a situation which disproportionately affects 

10 populations in developing countries. 

11 (6) Of more than $100,000,000,000 spent on 

12 health research and development across the world, 

13 only $6,000,000,000 is spent each year on diseases 

14 that are specific to developing countries, most of 

15 which is from public and philanthropic sources. 

16 (7) Infants, children, and adolescents are 

17 among the populations hardest hit by AIDS and ma18 laria, but they are at risk of being left behind in the 

19 search for effective vaccines against such diseases. 

20 (8) Providing a broad range of economic incen21 tives to increase private sector research on neglected 

22 diseases, including increased public and private sec23 tor funding for research and development, guaran24 teed markets, tax credits, and improved regulatory 

25 procedures would increase the number of products in 
5 

•S 1698 IS

1 development and the likelihood of finding effective 

2 vaccines for such diseases. 

3 SEC. 4. SENSE OF CONGRESS ON SUPPORT FOR NE4 GLECTED DISEASES. 

5 It is the sense of Congress that— 

6 (1) the President should continue to encourage 

7 efforts to support the Global HIV Vaccine Enter8 prise, a virtual consortium of scientists and organi9 zations committed to accelerating the development of 

10 an effective HIV vaccine; 

11 (2) the United States should work with the 

12 Global Fund to Fight AIDS, Tuberculosis and Ma13 laria, the Joint United Nations Programme on HIV/ 

14 AIDS (‘‘UNAIDS’’), the World Health Organiza15 tion, the International AIDS Vaccine Initiative, and 

16 the World Bank to ensure that all countries heavily 

17 affected by the HIV/AIDS pandemic have national 

18 AIDS vaccine plans; 

19 (3) the United States should support and en20 courage the carrying out of the agreements of the 

21 Group of 8 made at the 2005 Summit at Gleneagles, 

22 Scotland, to increase direct investment and create 

23 market incentives, including through public-private 

24 partnerships and advance market commitments, to 

25 complement public research in the development of 
6 

•S 1698 IS

1 vaccines, microbicides, and drugs for HIV/AIDS, 

2 malaria, tuberculosis, and other neglected diseases; 

3 (4) the United States should support testing of 

4 promising vaccines in infants, children, and adoles5 cents as early as is medically and ethically appro6 priate, in order to avoid significant delays in the 

7 availability of pediatric vaccines at the cost of thou8 sands of lives; 

9 (5) the United States should continue sup10 porting the work of the Global Alliance for Vaccines 

11 and Immunizations and the Global Fund for Chil12 dren’s Vaccines as appropriate and effective vehicles 

13 to purchase and distribute vaccines for neglected dis14 eases at an affordable price once such vaccines are 

15 discovered in order to distribute them to the devel16 oping world; and 

17 (6) the United States should work with others 

18 in the international community to address the mul19 tiple obstacles to the development of vaccines for ne20 glected diseases including scientific barriers, insuffi21 cient economic incentives, protracted regulatory pro22 cedures, lack of delivery systems for products once 

23 developed, liability risks, and intellectual property 

24 rights. 
7 

•S 1698 IS

1 SEC. 5. PUBLIC-PRIVATE PARTNERSHIPS. 

2 (a) FINDINGS.—Congress makes the following find3 ings: 

4 (1) Creative partnerships between governments 

5 and organizations in the private sector (including 

6 foundations, universities, corporations including 

7 pharmaceutical companies and biotechnology firms, 

8 community-based organizations and other non9 governmental organizations) are playing a critical 

10 role in the area of global health, particularly in the 

11 fight against neglected diseases, including HIV/ 

12 AIDS, tuberculosis, and malaria. 

13 (2) Public-private sector partnerships increase 

14 local and international capacities to improve the de15 livery of health services in developing countries and 

16 to accelerate research and development of vaccines 

17 and other preventive medical technologies essential 

18 to combating infectious diseases that disproportion19 ately kill people in developing countries. 

20 (3) These partnerships maximize the unique ca21 pabilities of each sector while combining financial 

22 and other resources, scientific knowledge, and exper23 tise toward common goals which cannot be achieved 

24 by either sector alone. 

25 (4) Public-private partnerships such as the 

26 International AIDS Vaccine Initiative, the Malaria 
8 

•S 1698 IS

1 Vaccine Initiative, and the Global TB Drug Facility 

2 are playing cutting edge roles in the efforts to de3 velop vaccines for these diseases. 

4 (5) Public-private partnerships serve as incen5 tives to the research and development of vaccines for 

6 neglected diseases by providing biotechnology compa7 nies, which often have no experience in developing 

8 countries, with technical assistance and on the 

9 ground support for clinical trials of the vaccine 

10 through the various stages of development. 

11 (6) Sustaining existing public-private partner12 ships and building new ones where needed are essen13 tial to the success of the efforts by the United States 

14 and others in the international community to find a 

15 cure for these and other neglected diseases. 

16 (b) SENSE OF CONGRESS.—It is the sense of Con17 gress that— 

18 (1) the sustainment and promotion of public19 private partnerships must be a central element of 

20 the strategy pursued by the United States to create 

21 effective incentives for the development of vaccines 

22 and other preventive medical technologies for ne23 glected diseases debilitating the developing world; 

24 and 
9 

•S 1698 IS

1 (2) the United States Government should take 

2 steps to address the obstacles to the development of 

3 these technologies by increasing investment in re4 search and development and establishing market and 

5 other incentives. 

6 (c) POLICY.—It is the policy of the United States to 

7 accelerate research and development for vaccines and 

8 microbicides for neglected diseases by substantially in9 creasing funding for public-private partnerships that in10 vest directly in research, such as the International AIDS 

11 Vaccine Initiative, the Malaria Vaccine Initiative, and the 

12 Global TB Drug Facility, and for partnerships such as 

13 the Vaccine Fund that incentivize the development of new 

14 vaccines by purchase existing vaccines. 

15 SEC. 6. COMPREHENSIVE STRATEGY FOR ACCELERATING 

16 THE DEVELOPMENT OF VACCINES FOR NE17 GLECTED DISEASES. 

18 (a) REQUIREMENT FOR STRATEGY.—The President 

19 shall establish a comprehensive strategy to accelerate ef20 forts to develop vaccines and microbicides for neglected 

21 diseases such as HIV/AIDS, malaria, and tuberculosis. 

22 Such strategy shall— 

23 (1) expand public-private partnerships and the 

24 leveraging of resources from other countries and the 

25 private sector; 
10 

•S 1698 IS

1 (2) include initiatives to create economic incen2 tives for the research, development, and manufac3 turing of vaccines for HIV/AIDS, tuberculosis, ma4 laria, and other neglected diseases; 

5 (3) include the negotiation of advanced market 

6 commitments; 

7 (4) address intellectual property issues sur8 rounding the development of vaccines and 

9 microbicidies for neglected diseases; 

10 (5) maximize United States capabilities to sup11 port clinical trials of vaccines and microbicidies in 

12 developing countries; 

13 (6) address the issue of regulatory approval of 

14 such vaccines, whether through the Commissioner of 

15 the Food and Drug Administration, or the World 

16 Health Organization or another internally-recognized 

17 and agreed upon entity; 

18 (7) expand the purchase and delivery of existing 

19 vaccines; and 

20 (8) address the challenges of delivering vaccines 

21 in developing countries in advance so as to minimize 

22 historical delays in access once vaccines are avail23 able. 

24 (b) REPORT.—Not later than 270 days after the date 

25 of enactment of this Act, the President shall submit to 
11 

•S 1698 IS

1 the appropriate congressional committees a report setting 

2 forth the strategy described in subsection (a) and the steps 

3 to implement such strategy. 

4 SEC. 7. ADVANCED MARKET COMMITMENTS. 

5 (a) PURPOSE.—The purpose of this section is to cre6 ate incentives for the private sector to invest in research, 

7 development, and manufacturing of vaccines for neglected 

8 diseases by creating a competitive market for future vac9 cines through advanced market commitments. 

10 (b) AUTHORITY TO NEGOTIATE.— 

11 (1) IN GENERAL.—The Secretary of the Treas12 ury shall enter into negotiations with the appro13 priate officials of the World Bank, the International 

14 Development Association, and Global Alliance for 

15 Vaccines and Immunizations, the member nations of 

16 such entities, and other interested parties for the 

17 purpose of establishing advanced market commit18 ments to purchase vaccines and microbicides to com19 bat neglected diseases. 

20 (2) REPORT.—Not later than 180 days after 

21 the date of the enactment of this Act, the Secretary 

22 shall submit to the appropriate congressional com23 mittees a report on the status of the negotiations to 

24 create advanced market commitments under this 

25 section. 
12 

•S 1698 IS

1 (c) REQUIREMENTS.—The Secretary of the Treasury 

2 shall work with the entities referred to in subsection (b) 

3 to ensure that there is an international framework for the 

4 establishment and implementation of advanced market 

5 commitments and that such commitments include— 

6 (1) legally binding contracts for product pur7 chase that include a fair market price for a guaran8 teed number of treatments to ensure that the mar9 ket incentive is sufficient; 

10 (2) clearly defined and transparent rules of 

11 competition for qualified developers and suppliers of 

12 the product; 

13 (3) clearly defined requirements for eligible vac14 cines to ensure that they are safe and effective; 

15 (4) dispute settlement mechanisms; and 

16 (5) sufficient flexibility to enable the contracts 

17 to be adjusted in accord with new information re18 lated to projected market size and other factors 

19 while still maintaining the purchase commitment at 

20 a fair price. 

21 (d) TRUST FUND.— 

22 (1) AUTHORITY TO ESTABLISH.—On the date 

23 that the Secretary of the Treasury determines that 

24 a vaccine to combat a neglected disease is available 

25 for purchase, the Secretary shall establish in the 
13 

•S 1698 IS

1 Treasury of the United States a fund to be known 

2 as the Lifesaving Vaccine Purchase Fund consisting 

3 of amounts appropriated pursuant to paragraph (4). 

4 (2) INVESTMENT OF FUND.—Amounts in such 

5 Fund shall be invested in accordance with section 

6 9702 of title 31, United States Code, and any inter7 est on, and proceeds from any such investment shall 

8 be credited to and become part of the Fund. 

9 (3) USE OF FUND.—The Secretary is author10 ized to expend amounts in such Fund for the pur11 chase of a vaccine to combat a neglected disease 

12 pursuant to an advanced market commitment under13 taken on behalf of the Government of the United 

14 States. 

15 (4) AUTHORITY TO ACCEPT CONTRIBUTIONS.— 

16 The President may accept and use in furtherance of 

17 the purposes of this Act contributions from non18 governmental organizations, international health 

19 agencies, the United Nations, the Global Fund to 

20 Fight AIDS, Tuberculosis and Malaria, private non21 profit organizations that are organized to support 

22 public health research and programs, and any other 

23 organizations willing to contribute to the Lifesaving 

24 Vaccine Purchase Fund. 

25 (5) APPROPRIATIONS.— 
14 

•S 1698 IS

1 (A) IN GENERAL.—For each fiscal year be2 ginning after the date that the Secretary deter3 mines that a vaccine to combat a neglected dis4 ease is available for purchase, there are author5 ized to be appropriated out of any funds in the 

6 Treasury not otherwise appropriated such sums 

7 as may be necessary to carry out the purposes 

8 of such Fund. 

9 (B) TRANSFER OF FUNDS.—The Secretary 

10 shall transfer the amount appropriated under 

11 paragraph (1) for a fiscal year to such Fund. 

12 (C) AVAILABILITY.—Amounts appro13 priated pursuant to this paragraph shall remain 

14 available until expended without fiscal year lim15 itation. 

16 SEC. 8. CREDIT FOR MEDICAL RESEARCH RELATED TO DE17 VELOPING VACCINES AGAINST NEGLECTED 

18 DISEASES. 

19 (a) IN GENERAL.—Subpart D of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code of 

21 1986 (relating to business related credits) is amended by 

22 adding at the end the following new section: 
15 

•S 1698 IS

1 ‘‘SEC. 45J. CREDIT FOR MEDICAL RESEARCH RELATED TO 

2 DEVELOPING VACCINES FOR NEGLECTED 

3 DISEASES. 

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

5 the vaccine research credit determined under this section 

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

7 the qualified vaccine research expenses for the taxable 

8 year. 

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

10 For purposes of this section— 

11 ‘‘(1) QUALIFIED VACCINE RESEARCH EX12 PENSES.— 

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

14 provided in this paragraph, the term ‘qualified 

15 vaccine research expenses’ means the amounts 

16 which are paid or incurred by the taxpayer dur17 ing the taxable year which would be described 

18 in subsection (b) of section 41 if such sub19 section were applied with the modifications set 

20 forth in subparagraph (B). 

21 ‘‘(B) MODIFICATIONS; INCREASED INCEN22 TIVE FOR CONTRACT RESEARCH PAYMENTS.— 

23 For purposes of subparagraph (A), subsection 

24 (b) of section 41 shall be applied— 

25 ‘‘(i) by substituting ‘vaccine research’ 

26 for ‘qualified research’ each place it ap-
16 

•S 1698 IS

1 pears in paragraphs (2) and (3) of such 

2 subsection, and 

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

4 ‘65 percent’ in paragraph (3)(A) of such 

5 subsection. 

6 ‘‘(C) EXCLUSION FOR AMOUNTS FUNDED

7 BY GRANTS, ETC.—The term ‘qualified vaccine 

8 research expenses’ shall not include any amount 

9 to the extent such amount is funded by any 

10 grant, contract, or otherwise by another person 

11 (or any governmental entity). 

12 ‘‘(2) VACCINE RESEARCH.—The term ‘vaccine 

13 research’ means research to develop vaccines and 

14 microbicides for— 

15 ‘‘(A) HIV/AIDS (as that term is defined in 

16 section 104A(g) of the Foreign Assistance Act 

17 of 1961 (22 U.S.C. 21516–2)), 

18 ‘‘(B) malaria, 

19 ‘‘(C) tuberculosis, or 

20 ‘‘(D) any infectious disease (of a single eti21 ology) which, according to the World Health 

22 Organization, causes more than 1,000,000 

23 human deaths each year in developing coun24 tries. 
17 

•S 1698 IS

1 ‘‘(c) COORDINATION WITH CREDIT FOR INCREASING

2 RESEARCH EXPENDITURES.— 

3 ‘‘(1) IN GENERAL.—Except as provided in para4 graph (2), any qualified vaccine research expenses 

5 for a taxable year to which an election under this 

6 section applies shall not be taken into account for 

7 purposes of determining the credit allowable under 

8 section 41 for such taxable year. 

9 ‘‘(2) EXPENSES INCLUDED IN DETERMINING

10 BASE PERIOD RESEARCH EXPENSES.—Any qualified 

11 vaccine research expenses for any taxable year which 

12 are qualified research expenses (within the meaning 

13 of section 41(b)) shall be taken into account in de14 termining base period research expenses for pur15 poses of applying section 41 to subsequent taxable 

16 years. 

17 ‘‘(d) SPECIAL RULES.— 

18 ‘‘(1) LIMITATIONS ON FOREIGN TESTING.—No 

19 credit shall be allowed under this section with re20 spect to any vaccine research (other than human 

21 clinical testing) conducted outside the United States. 

22 ‘‘(2) PRE-CLINICAL RESEARCH.—No credit shall 

23 be allowed under this section for pre-clinical re24 search unless such research is pursuant to a re25 search plan an abstract of which has been filed with 
18 

•S 1698 IS

1 the Secretary before the beginning of such year. The 

2 Secretary, in consultation with the Secretary of 

3 Health and Human Services, shall prescribe regula4 tions specifying the requirements for such plans and 

5 procedures for filing under this paragraph. 

6 ‘‘(3) CERTAIN RULES MADE APPLICABLE.— 

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

8 of section 41(f) shall apply for purposes of this sec9 tion. 

10 ‘‘(4) ELECTION.—This section (other than sub11 section (e)) shall apply to any taxpayer for any tax12 able year only if such taxpayer elects to have this 

13 section apply for such taxable year. 

14 ‘‘(e) CREDIT TO BE REFUNDABLE FOR CERTAIN

15 TAXPAYERS.— 

16 ‘‘(1) IN GENERAL.—In the case of an electing 

17 qualified taxpayer— 

18 ‘‘(A) the credit under this section shall be 

19 determined without regard to section 38(c), and 

20 ‘‘(B) the credit so determined shall be al21 lowed as a credit under subpart C. 

22 ‘‘(2) ELECTING QUALIFIED TAXPAYER.—For 

23 purposes of this subsection, the term ‘electing quali24 fied taxpayer’ means, with respect to any taxable 

25 year, any domestic C corporation if— 
19 

•S 1698 IS

1 ‘‘(A) the aggregate gross assets of such 

2 corporation at any time during such taxable 

3 year are $500,000,000 or less, 

4 ‘‘(B) the net income tax (as defined in sec5 tion 38(c)) of such corporation is zero for such 

6 taxable year and the 2 preceding taxable years, 

7 ‘‘(C) as of the close of the taxable year, the 

8 corporation is not under the jurisdiction of a 

9 court in a title 11 or similar case (within the 

10 meaning of section 368(a)(3)(A)), 

11 ‘‘(D) the corporation provides such assur12 ances as the Secretary requires that, not later 

13 than 2 taxable years after the taxable year in 

14 which the taxpayer receives any refund of a 

15 credit under this subsection, the taxpayer will 

16 make an amount of qualified vaccine research 

17 expenses equal to the amount of such refund, 

18 and 

19 ‘‘(E) the corporation elects the application 

20 of this subsection for such taxable year. 

21 ‘‘(3) AGGREGATE GROSS ASSETS.—Aggregate 

22 gross assets shall be determined in the same manner 

23 as such assets are determined under section 

24 1202(d). 
20 

•S 1698 IS

1 ‘‘(4) CONTROLLED GROUPS.—A corporation 

2 shall be treated as meeting the requirement of para3 graph (2)(B) only if each person who is treated with 

4 such corporation as a single employer under sub5 sections (a) and (b) of section 52 also meets such re6 quirement. 

7 ‘‘(5) SPECIAL RULES.— 

8 ‘‘(A) RECAPTURE OF CREDIT.—The Sec9 retary shall promulgate such regulations as nec10 essary and appropriate to provide for the recap11 ture of any credit allowed under this subsection 

12 in cases where the taxpayer fails to make the 

13 expenditures described in paragraph (2)(D). 

14 ‘‘(B) EXCLUSION OF CERTAIN QUALIFIED

15 VACCINE RESEARCH EXPENSES.—For purposes 

16 of determining the credit under this section for 

17 a taxable year, the qualified vaccine research 

18 expenses taken into account for such taxable 

19 year shall not include an amount paid or in20 curred during such taxable year equal to the 

21 amount described in paragraph (2)(D) (and not 

22 already taken into account under this subpara23 graph for a previous taxable year).’’. 

24 (b) INCLUSION IN GENERAL BUSINESS CREDIT.— 

25 Section 38(b) of the Internal Revenue Code of 1986 is 
21 

•S 1698 IS

1 amended by striking ‘‘plus’’ at the end of paragraph (18), 

2 by striking the period at the end of paragraph (19) and 

3 inserting ‘‘, plus’’, and by adding at the end the following 

4 new paragraph: 

5 ‘‘(20) the vaccine research credit determined 

6 under section 45J.’’. 

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

8 the Internal Revenue Code of 1986 is amended by adding 

9 at the end the following new subsection: 

10 ‘‘(e) CREDIT FOR QUALIFIED VACCINE RESEARCH

11 EXPENSES.— 

12 ‘‘(1) IN GENERAL.—No deduction shall be al13 lowed for that portion of the qualified vaccine re14 search expenses (as defined in section 45J(b)) other15 wise allowable as a deduction for the taxable year 

16 which is equal to the amount of the credit deter17 mined for such taxable year under section 45J(a). 

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

19 to the rules of paragraphs (2), (3), and (4) of sub20 section (c) shall apply for purposes of this sub21 section.’’. 

22 (d) DEDUCTION FOR UNUSED PORTION OF CRED23 IT.—Section 196(c) of the Internal Revenue Code of 1986 

24 (defining qualified business credits) is amended by strik25 ing ‘‘and’’ at the end of paragraph (11), by striking the 
22 

•S 1698 IS

1 period at the end of paragraph (12) and inserting ‘‘, and’’, 

2 and by adding at the end the following new paragraph: 

3 ‘‘(13) the vaccine research credit determined 

4 under section 45J(a) (other than such credit deter5 mined under the rules of section 280C(e)(2)).’’. 

6 (e) TECHNICAL AMENDMENTS.— 

7 (1) Section 1324(b)(2) of title 31, United 

8 States Code, is amended by inserting ‘‘or from sec9 tion 45J(e) of such Code,’’ after ‘‘1978,’’. 

10 (2) The table of sections for subpart D of part 

11 IV of subchapter A of chapter 1 of the Internal Rev12 enue Code of 1986 is amended by adding at the end 

13 the following new item: 

‘‘Sec. 45J. Credit for medical research related to developing vaccines against 

widespread diseases.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2005. 

17 (g) STUDY.— 

18 (1) IN GENERAL.—The National Institutes of 

19 Health shall conduct a study of the extent to which 

20 the credit under section 45J of the Internal Revenue 

21 Code of 1986, as added by subsection (a), has stim22 ulated vaccine research. 

23 (2) REPORT.—Not later than the date that is 

24 5 years after the date of the enactment of this Act, 
23 

•S 1698 IS

1 the National Institutes of Health shall submit to 

2 Congress the results of the study conducted under 

3 paragraph (1), together with recommendations (if 

4 any) to improve the effectiveness of such credit in 

5 stimulating vaccine research. 

6 SEC. 9. CREDIT FOR CERTAIN SALES OF LIFESAVING VAC7 CINES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to business related credits), as amended by 

11 section 4, is amended by adding at the end the following 

12 new section: 

13 ‘‘SEC. 45K. CREDIT FOR CERTAIN SALES OF LIFESAVING 

14 VACCINES. 

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

16 lifesaving vaccine sale credit determined under this section 

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

18 amount equal to the amount of qualified vaccine sales for 

19 the taxable year. 

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

21 this section— 

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

23 sales’ means the aggregate amount paid to the tax24 payer for a qualified sale. 

25 ‘‘(2) QUALIFIED SALE.— 
24 

•S 1698 IS

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

2 sale’ means a sale of a qualified vaccine— 

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

4 a government of any foreign country (or 

5 instrumentality of such a government), and 

6 ‘‘(ii) for distribution in a developing 

7 country. 

8 ‘‘(B) DEVELOPING COUNTRY.—For pur9 poses of this paragraph, the term ‘developing 

10 country’ means a country which the Secretary 

11 determines to be a country with a lower middle 

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

13 International Bank for Reconstruction and De14 velopment). 

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

16 vaccine’ means any vaccine and microbicide— 

17 ‘‘(A) which is described in section 

18 45J(b)(2), and 

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

20 after the date of the enactment of this para21 graph by— 

22 ‘‘(i) the Food and Drug Administra23 tion, 

24 ‘‘(ii) the World Health Organization, 

25 or 
25 

•S 1698 IS

1 ‘‘(iii) the appropriate authority of a 

2 country included in the list under section 

3 802(b)(1) of the Federal Food, Drug, and 

4 Cosmetic Act. 

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

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

7 respect to a sale shall not exceed the portion of the limita8 tion amount allocated under subsection (d) with respect 

9 to such sale. 

10 ‘‘(d) NATIONAL LIMITATION ON AMOUNT OF CRED11 ITS.— 

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (3), there is a lifesaving vaccine sale credit 

14 limitation amount for each calendar year equal to— 

15 ‘‘(A) $100,000,000 for each of years 2006 

16 through 2010, and 

17 ‘‘(B) $125,000,000 for each of years 2011 

18 through 2012. 

19 ‘‘(2) ALLOCATION OF LIMITATION.— 

20 ‘‘(A) IN GENERAL.—The limitation amount 

21 under paragraph (1) shall be allocated for any 

22 calendar year by the Administrator of the 

23 United States Agency for International Devel24 opment (referred to in this section as the ‘Ad25 ministrator’) among organizations with an ap-
26 

•S 1698 IS

1 plication approved by the Administrator in ac2 cordance with subparagraph (B). 

3 ‘‘(B) APPLICATION FOR ALLOCATION.— 

4 The Administrator shall prescribe the proce5 dures for an application for an allocation under 

6 this subsection and the factors to be taken into 

7 account in making such allocations. Such appli8 cations shall be made at such time and in such 

9 form and manner as the Administrator shall 

10 prescribe and shall include a detailed plan for 

11 distribution of the vaccine. 

12 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 

13 the limitation amount under paragraph (1) for any 

14 calendar year exceeds the aggregate amount allo15 cated under paragraph (2), such limitation for the 

16 following calendar year shall be increased by the 

17 amount of such excess. No amount may be carried 

18 under the preceding sentence to any calendar year 

19 after 2024. 

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

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

22 (b) INCLUSION IN GENERAL BUSINESS CREDIT.— 

23 Section 38(b) of the Internal Revenue Code of 1986 (relat24 ing to current year business credit), as amended by section 

25 4(b), is amended by striking ‘‘plus’’ at the end of para-
27 

•S 1698 IS

1 graph (19), by striking the period at the end of paragraph 

2 (20) and inserting ‘‘, plus’’, and by adding at the end the 

3 following new paragraph: 

4 ‘‘(21) the lifesaving vaccine sale credit deter5 mined under section 45K.’’. 

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

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

8 of the Internal Revenue Code of 1986, as amended by sec9 tion 2(c), is amended by adding at the end the following 

10 new item: 

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

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

12 this section shall apply to sales of vaccines after December 

13 31, 2005, in taxable years ending after such date. 

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

15 DEVELOPMENT. 

16 (a) PILOT PROGRAM.—Section 9 of the Small Busi17 ness Act (15 U.S.C. 638) is amended by adding at the 

18 end the following: 

19 ‘‘(x) REQUIRED EXPENDITURES FOR THE DEVELOP20 MENT OF VACCINES FOR NEGLECTED DISEASES.— 

21 ‘‘(1) SBIR EXPENDITURES.—Each agency re22 quired to make expenditures under subsection (f)(1) 

23 or under subsection (n)(1), that is determined by the 

24 Administrator to have a mission related to global 

25 health or disease prevention shall expend with small 
28 

•S 1698 IS

1 business concerns, in addition to any amounts re2 quired to be expended under subsections (f) and (n), 

3 not less than $10,000,000 for fiscal year 2006 and 

4 each fiscal year thereafter, specifically in connection 

5 with SBIR and STTR programs which meet the re6 quirements of this section, policy directives, and reg7 ulations to carry out this section, to carry out the 

8 pilot program established under this subsection. 

9 ‘‘(2) PILOT PROGRAM.—During the 4-year pe10 riod beginning on the date of enactment of the Vac11 cines for the New Millennium Act of 2005, the Ad12 ministrator shall establish and carry out a program 

13 to encourage the development of vaccines and 

14 microbicides to combat a neglected disease, including 

15 outreach activities to raise awareness of such pro16 gram. 

17 ‘‘(3) ADMINISTRATIVE COSTS.—The limitations 

18 in subsection (f)(2) and (n)(2) shall not apply to 

19 agency expenditures under the pilot program estab20 lished under this subsection. 

21 ‘‘(4) REPORT.—Six months before the date of 

22 expiration of the pilot program established under 

23 this subsection, the Administrator shall submit to 

24 the Committee on Small Business and Entrepre25 neurship of the Senate and the Committee on Small 
29 

•S 1698 IS

1 Business of the House of Representatives a report 

2 containing an assessment of whether the pilot pro3 gram is meeting the objective of providing incentives 

4 to small business concerns to research the develop5 ment of vaccines and microbicides to combat a ne6 glected disease, and an accounting of the expendi7 tures for the pilot program. 

8 ‘‘(5) DEFINITIONS.—As used in this subsection 

9 and subsection (j), the terms ‘neglected disease’ and 

10 ‘developing country’ have the same meanings as in 

11 section 2 of the Vaccines for the New Millennium 

12 Act of 2005.’’. 

13 (b) POLICY OBJECTIVES.—Section 9(j) of the Small 

14 Business Act (15 U.S.C. 638(j)) is amended by adding 

15 at the end the following: 

16 ‘‘(4) ADDITIONAL MODIFICATIONS FOR THE DE17 VELOPMENT OF VACCINES FOR A NEGLECTED DIS18 EASE.—Not later than 90 days after the date of en19 actment of the Vaccines for the New Millennium Act 

20 of 2005, the Administrator shall modify the policy 

21 directives issued pursuant to this subsection to en22 sure that agencies participating in the SBIR and 

23 STTR programs develop an action plan for imple24 menting the pilot program for the development of 

25 vaccines and microbicides to combat a neglected dis-
30 

•S 1698 IS

1 ease under subsection (x), including outreach to 

2 raise awareness of the pilot program.’’. 

Æ