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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2132 Introduced in Senate (IS)]

106th CONGRESS
  2d Session
                                S. 2132

To create incentives for private sector research related to developing 
vaccines against widespread diseases and ensure that such vaccines are 
                   affordable and widely distributed.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 1, 2000

  Mr. Kerry (for himself, Mr. Frist, and Mrs. Murray) introduced the 
 following bill; which was read twice and referred to the Committee on 
                           Foreign Relations

_______________________________________________________________________

                                 A BILL

 
To create incentives for private sector research related to developing 
vaccines against widespread diseases and ensure that such vaccines are 
                   affordable and widely distributed.

    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 2000''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Vaccines are among the most cost-effective weapons in 
        the arsenal of modern medicine to stop the spread of contagious 
        diseases and strengthen an individual's immune system to resist 
        a wide range of infectious diseases, and vaccines offer a 
        relatively inexpensive means of lowering a society's overall 
        cost of medical care.
            (2) Every year, up to 3,000,000 children's lives are saved 
        as the result of early childhood immunizations. But almost 
        3,000,000 more lives worldwide are lost from diseases that 
        could be prevented with existing vaccines.
            (3) Today, 1 in 4 children do not receive the 6 basic 
        vaccinations: polio, diptheria, whooping cough, tetanus, 
        measles, and tuberculosis. The proportion of children immunized 
        against these 6 diseases has declined in recent years, from 
        approximately 80 percent in 1990 to 74 percent in 1998.
            (4) Safe, effective, and universal immunization is a means 
        to end the tragedy of avoidable childhood deaths, and a means 
        to improve the overall health, productivity, and security of 
        society.
            (5) As well as the challenges of increasing access to 
        existing vaccines, there are additional challenges for research 
        and development of new vaccines. Over 5,000,000 people die 
        annually from HIV, tuberculosis, and malaria. Vaccines against 
        these infectious diseases are urgently needed.
            (6) The spread of HIV is a human tragedy that is reversing 
        previous gains in life expectancy and exacerbating poverty in 
        developing countries. Over 33,000,000 people are infected with 
        HIV, and the disease will kill more than 2,500,000 people this 
        year. More than 11,000,000 children worldwide have been 
        orphaned by AIDS and 16,000 people become newly infected every 
        day.
            (7) While an estimated $2,000,000,000 is spent annually on 
        research for AIDS treatment, much of it by the private sector, 
        the total global research and development for preventive HIV 
        vaccines is substantially less, perhaps as little as 
        $300,000,000, and of the amount spent on lifesaving vaccine 
        research, only a fraction is financed by private sector drug 
        manufacturers.
            (8) Between 7,000,000 and 8,000,000 individuals develop 
        active tuberculosis every year and 2,000,000 to 3,000,000 
        individuals die from tuberculosis each year, with tuberculosis 
        accounting for more than \1/4\ of all preventable adult deaths 
        in developing countries. An individual is newly infected with 
        tuberculosis every second, and someone dies of tuberculosis 
        every 10 seconds.
            (9) Each year, 300,000,000 to 500,000,000 individuals 
        become ill with malaria, and approximately 1,000,000 
        individuals die from the disease, exacting an enormous toll in 
        lives, medical costs, and lost productivity. The majority of 
        those who die from malaria are children under the age of 5. One 
        person dies from malaria every 30 seconds.
            (10) While additional public funds for basic research are 
        critical in the effort to find vaccines for HIV, malaria, and 
        tuberculosis, equally important is a concerted effort by 
        private sector drug manufacturers to find vaccines for these 3 
        major infectious diseases.
            (11) Additional, targeted public subsidies for private 
        sector lifesaving vaccine research and development are 
        justified on the basis that achieving effective and affordable 
        vaccines for HIV, malaria, and tuberculosis will yield public 
        benefits beyond those benefits captured by the manufacturer.

SEC. 3. UNIVERSAL EARLY CHILDHOOD IMMUNIZATIONS.

    Section 104(c)(3) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2151b(c)(3)) is amended in the fourth sentence by striking ``the 
protection of'' and all that follows through ``1991'' and inserting 
``the universal protection of all children from immunizable diseases by 
December 31, 2009''.

SEC. 4. VOLUNTARY CONTRIBUTION TO GLOBAL ALLIANCE FOR VACCINES AND 
              IMMUNIZATIONS AND INTERNATIONAL AIDS VACCINE INITIATIVE.

    (a) Authorization of Appropriations.--Section 302 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2222) is amended by adding at the end 
the following:
    ``(j) In addition to amounts otherwise available under this 
section, there are authorized to be appropriated to the President for 
fiscal year 2001 an amount not in excess of $50,000,000 and for fiscal 
year 2002 an amount not in excess of $100,000,000 to be available only 
for United States contributions to the Global Alliance for Vaccines and 
Immunizations.
    ``(k) In addition to amounts otherwise available under this 
section, there are authorized to be appropriated to the President for 
fiscal year 2001 $10,000,000 and for fiscal year 2002 $20,000,000 to be 
available only for United States contributions to the International 
AIDS Vaccine Initiative.''.
    (b) Report.--The President shall include in the July 1 report 
submitted to Congress under section 305(b)(1) of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2226(b)(1)) for fiscal years 2001 and 2002 a 
report on the effectiveness of the Global Alliance for Vaccines and 
Immunizations in meeting the goals of--
            (1) improving access to sustainable immunization services;
            (2) expanding the use of all existing, safe, and cost-
        effective vaccines where they address a public health problem;
            (3) accelerating the development and introduction of new 
        vaccines and technologies;
            (4) accelerating research and development efforts for 
        vaccines needed primarily in developing countries; and
            (5) making immunization coverage a centerpiece in 
        international development efforts.

SEC. 5. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING VACCINES 
              AGAINST WIDESPREAD 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. 45D. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING VACCINES 
              AGAINST WIDESPREAD 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 50 percent of the excess (if any) of--
            ``(1) the qualified vaccine research expenses for the 
        taxable year, over
            ``(2) the base amount.
    ``(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.--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 `75 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.--
                    ``(A) In general.--The term `vaccine research' 
                means research to develop vaccines and microbicides 
                for--
                            ``(i) malaria,
                            ``(ii) tuberculosis,
                            ``(iii) HIV, or
                            ``(iv) any infectious disease (of a single 
                        etiology) that is determined by the Secretary 
                        of Health and Human Services (after 
                        consultation with the Director of the Center 
                        for Disease Control and Prevention and the 
                        Administrator of the United States Agency for 
                        International Development) to cause the deaths 
                        of over 1,000,000 people worldwide each year.
                    ``(B) Microbicide.--The term `microbicide' means a 
                substance used topically for prevention from infection 
                by an identified pathogen.
                    ``(C) Vaccine.--The term `vaccine' means a product 
                using all or portions of the disease-causing organism 
                or nucleic acid sequences for prevention from infection 
                by an identified pathogen.
    ``(c) Base Amount.--For purposes of this section, the term `base 
amount' means the amount which would be determined for the taxable year 
under section 41(c) (without regard to paragraph (4) thereof) if such 
subsection were applied by substituting `qualified vaccine research 
expenses' for `qualified research expenses' each place it appears.
    ``(d) Coordination With Credit for Increasing Research 
Expenditures.--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.
    ``(e) Special Rules.--
            ``(1) 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.
            ``(2) Election.--This section (other than subsection (f)) 
        shall apply to any taxpayer for any taxable year only if such 
        taxpayer elects to have this section apply for such taxable 
        year.
    ``(f) Shareholder Equity Investment Credit in Lieu of Research 
Credit.--
            ``(1) In general.--For purposes of section 38, the vaccine 
        research credit determined under this section for the taxable 
        year shall include an amount equal to 25 percent of the amount 
        paid by the taxpayer to acquire qualified research stock in a 
        corporation if--
                    ``(A) the amount received by the corporation for 
                such stock is used within 18 months after the amount is 
                received to pay qualified vaccine research expenses of 
                the corporation for which a credit would (but for 
                subparagraph (B) and subsection (d)(3)) be determined 
under this section, and
                    ``(B) the corporation waives its right to the 
                credit determined under this section for the qualified 
                vaccine research expenses which are paid with such 
                amount.
            ``(2) Qualified research stock.--For purposes of paragraph 
        (1), the term `qualified research stock' means any stock in a C 
        corporation--
                    ``(A) which is originally issued after the date of 
                the enactment of the Vaccine for the New Millennium Act 
                of 2000,
                    ``(B) which is acquired by the taxpayer at its 
                original issue (directly or through an underwriter) in 
                exchange for money or other property (not including 
                stock), and
                    ``(C) as of the date of issuance, such corporation 
                meets the gross assets tests of subparagraphs (A) and 
                (B) of section 1202(d)(1).''.
    (b) Inclusion in General Business Credit.--
            (1) In general.--Section 38(b) of the Internal Revenue Code 
        of 1986 (relating to current year business credit) is amended 
        by striking ``plus'' at the end of paragraph (11), by striking 
        the period at the end of paragraph (12) and inserting ``, 
        plus'', and by adding at the end the following new paragraph:
            ``(13) the vaccine research credit determined under section 
        45D.''.
            (2) Transition rule.--Section 39(d) of such Code (relating 
        to transitional rules) is amended by adding at the end the 
        following new paragraph:
            ``(9) No carryback of section 45d credit before 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to the vaccine research 
        credit determined under section 45D may be carried back to a 
        taxable year ending before the date of the enactment of section 
        45D.''.
    (c) Denial of Double Benefit.--Section 280C of the Internal Revenue 
Code of 1986 (relating to certain expenses for which credits are 
allowable) is amended by adding at the end the following new 
subsection:
    ``(d) 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 45D(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 45D(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 (7), by striking 
the period at the end of paragraph (8) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(9) the vaccine research credit determined under section 
        45D(a) (other than such credit determined under the rules of 
        section 280C(d)(2)).''.
    (e) 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 is amended by adding at the end the following new item:

                              ``Sec. 45D. 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 ending after the date of the enactment of this 
Act.
    (g) Distribution of Vaccines Developed Using Credit.--It is the 
sense of Congress that if a tax credit is allowed under section 45D of 
the Internal Revenue Code of 1986 to any corporation or shareholder of 
a corporation by reason of vaccine research expenses incurred by the 
corporation in the development of a vaccine, such corporation should 
certify to the Secretary of the Treasury that, within 1 year after that 
vaccine is first licensed, such corporation will establish a good faith 
plan to maximize international access to high quality and affordable 
vaccines.
    (h) Study.--The Secretary of the Treasury, in consultation with the 
Institute of Medicine, shall conduct a study of the effectiveness of 
the credit under section 45D of the Internal Revenue Code of 1986 in 
stimulating vaccine research. Not later than the date which is 4 years 
after the date of the enactment of this Act, the Secretary shall submit 
to the Congress the results of such study together with any 
recommendations the Secretary may have to improve the effectiveness of 
such credit in stimulating vaccine research.

SEC. 6. 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 5(a), is amended by adding at the end 
the following new section:

``SEC. 45E. 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, 
                        governmental unit, or government of any foreign 
                        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 International Bank for Reconstruction 
                and Development (commonly referred to as the 
`World Bank') determines to be a country with a lower middle income or 
less.
            ``(3) Qualified vaccine.--The term `qualified vaccine' 
        means a vaccine (as defined in section 4132(a)(2)) which is--
                    ``(A) approved by the Food and Drug Administration 
                as a new drug after the date of the enactment of this 
                paragraph, and
                    ``(B) used for--
                            ``(i) malaria,
                            ``(ii) tuberculosis,
                            ``(iii) HIV, or
                            ``(iv) any infectious disease (of a single 
                        etiology) that is determined by the Secretary 
                        of Health and Human Services (after 
                        consultation with the Director of the Center 
                        for Disease Control and Prevention and the 
                        United States Agency for International 
                        Development) to cause the deaths of over 
                        1,000,000 people worldwide each year.
    ``(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 for each calendar 
        year equal to--
                    ``(A) $100,000,000 for each of years 2002 through 
                2006,
                    ``(B) $125,000,000 for each of years 2007 through 
                2010, and
                    ``(C) zero after 2011.
            ``(2) Allocation of limitation.--
                    ``(A) In general.--The limitation amount under 
                paragraph (1) shall be allocated on a competitive basis 
                for any calendar year by the Secretary (in consultation 
                with the Administrator of the United States Agency for 
                International Development) among organizations with an 
                approved application.
                    ``(B) Approved application.--For purposes of 
                subparagraph (A), the term `approved application' means 
                an application which is approved by the Administrator 
                of the United States Agency for International 
                Development with respect to a qualified sale made 
                during the calendar year. Such application shall be 
                made at such time and in such form and manner as the 
                Administrator shall prescribe by regulation and shall 
                include a detailed and cost-effective 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. The limitation amount shall remain 
        available until expended.
    ``(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.--
            (1) In general.--Section 38(b) of the Internal Revenue Code 
        of 1986 (relating to current year business credit), as amended 
        by section 5(b)(1), is amended by striking ``plus'' at the end 
        of paragraph (12), by striking the period at the end of 
        paragraph (13) and inserting ``, plus'', and by adding at the 
        end the following new paragraph:
            ``(14) the lifesaving vaccine sale credit determined under 
        section 45E.''.
            (2) Transition rule.--Section 39(d) of such Code (relating 
        to transitional rules), as amended by section 5(b)(2), is 
        amended by adding at the end the following new paragraph:
            ``(10) No carryback of section 45e credit before 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to the lifesaving vaccine 
        sale credit determined under section 45E may be carried back to 
        a taxable year ending before the date of the enactment of 
        section 45E.''.
    (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 5(e), is amended by adding at the end the 
following new item:

                              ``Sec. 45E. Credit for certain sales of 
                                        lifesaving vaccines.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to sales of vaccines in taxable years beginning after December 
31, 2000.

SEC. 7. LIFESAVING VACCINE PURCHASE FUND.

    (a) Purpose.--It is the purpose of this section to--
            (1) create incentives for private sector research into 
        vaccines for HIV, malaria, tuberculosis, and other major 
        infectious diseases; and
            (2) ensure that vaccines for major infectious diseases are 
        affordable and widely distributed.
    (b) Definitions.--In this section:
            (1) Developing country.--The term ``developing country'' 
        means a country which the International Bank for Reconstruction 
        and Development (commonly referred to as the ``World Bank'') 
        determines to be a country with a lower middle income or less.
            (2) Eligible vaccine.--The term ``eligible vaccine'' has 
        the meaning given the term ``qualified vaccine'' in section 
        45E(b)(3) of the Internal Revenue Code of 1986.
    (c) Establishment of Trust Fund.--There is established in the 
Treasury of the United States a trust fund to be known as the 
``Lifesaving Vaccine Purchase Fund'' (in this section referred to as 
the ``Fund'') consisting of amounts appropriated under subsection (f).
    (d) Investment of Fund.--Amounts in the 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.
    (e) Use of Fund.--
            (1) In general.--The Secretary of Treasury (in this section 
        referred to as the ``Secretary'') is authorized to expend 
        amounts in the Fund for purchases of eligible vaccines. Such 
        vaccines shall be distributed to developing countries.
            (2) Limitation.--The Secretary shall not make expenditures 
        from the Fund in excess of $100,000,000 for any fiscal year.
            (3) Regulations.--The Secretary shall promulgate such 
        regulations as are necessary to carry out the provisions of 
        this subsection, including regulations regarding--
                    (A) the procedures for purchasing eligible 
                vaccines, including pricing rules which take into 
                account the seller's research and development and 
                manufacturing costs and the desirability of the vaccine 
                purchased, a funding formula establishing a minimum 
                price per dose, and minimum technical requirements and 
                a market test requirement for the eligible vaccine; and
                    (B) the distribution of eligible vaccines to 
                developing countries under agreements between the 
                United States Agency for International Development and 
                international organizations or recipient developing 
                countries that provide for--
                            (i) consideration of the prevalence of the 
                        disease treated by the eligible vaccine in the 
                        recipient developing country;
                            (ii) consideration of the ability of the 
                        recipient country to effectively and safely 
                        deliver the vaccines; and
                            (iii) a required matching payment by the 
                        recipient developing country based on the per 
                        capita income of the country, in an amount not 
                        in excess of 25 percent of the purchase price 
                        paid for such vaccine.
            (4) Consultation.--The Secretary shall promulgate 
        regulations under paragraph (3) after extensive consultation 
        with--
                    (A) the International Bank for Reconstruction and 
                Development (commonly referred to as the ``World 
                Bank'');
                    (B) the World Health Organization; and
                    (C) the Secretary of Health and Human Services.
    (f) Appropriations.--
            (1) In general.--Subject to paragraph (2), there are 
        appropriated out of any funds in the Treasury not otherwise 
        appropriated such sums as may be necessary to carry out the 
        purposes of the Fund for each of 10 fiscal years beginning with 
        the first fiscal year in which the Secretary makes an 
        expenditure from the Fund.
            (2) Limitation.--The amount appropriated for any fiscal 
        year under paragraph (1) may not exceed $100,000,000.
            (3) Transfer to fund.--The Secretary shall transfer the 
        amount appropriated under paragraph (1) for a fiscal year to 
        the Fund.
            (4) Availability.--Amounts appropriated under this section 
        shall remain available until expended.

SEC. 8. MULTILATERAL LIFESAVING VACCINE PURCHASE FUND.

    (a) Negotiations.--The President should enter into negotiations 
with officials of foreign governments and other interested parties for 
the establishment of an international vaccine purchase fund that 
would--
            (1) accept contributions from governments of developed 
        countries;
            (2) use such contributions to purchase and distribute in 
        developing countries vaccines for--
                    (A) malaria,
                    (B) tuberculosis,
                    (C) HIV, and
                    (D) any infectious disease (of a single etiology) 
                which causes the deaths of over 1,000,000 people 
                worldwide each year; and
            (3) be a significant market incentive for private sector 
        vaccine research.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, and annually thereafter, the President shall report to 
Congress on--
            (1) the status of negotiations under subsection (a); and
            (2) if such fund is established, any recommendations for 
        further action, including recommendations regarding the 
        Lifesaving Vaccine Purchase Fund established under section 7 of 
        this Act.

SEC. 9. SENSE OF CONGRESS.

    It is the sense of Congress that flexible or differential pricing 
for vaccines, providing lowered prices for the poorest countries, is 
one of several valid strategies to accelerate the introduction of 
vaccines in developing countries.
                                 <all>
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