II 

109TH CONGRESS 

1ST SESSION S. 96 

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. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2005 

Mr. INHOFE introduced the following bill; which was read twice and referred 

to the Committee on Finance 

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. 

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

2 This Act may be cited as the ‘‘Flu Vaccine Incentive 

3 Act of 2005’’ or the ‘‘FLU–VIA’’. 

4 SEC. 2. FINDINGS. 

5 Congress makes the following findings: 

6 (1) 30 years ago, more than a dozen companies 

7 produced the influenza vaccine in the United States. 

8 As of 2004, only 2 companies make the vaccine for 

9 the United States. 

10 (2) Currently, the influenza vaccine is grown in 

11 eggs through a process that takes approximately 6 

12 months and consumes tens of thousands of eggs. 

13 (3) Companies are developing new technologies 

14 for the faster and safer production of the influenza 

15 vaccine. For example, one manufacturer is testing a 

16 process that relies on cell lines from silk moths, a 

17 technique that promises to shave the production 

18 time by at least a month and reduce the costs sig19 nificantly. 

20 (4) The United States should do all that it can 

21 to encourage research and development of new tech22 nologies for the production of influenza vaccines. 

23 SEC. 3. TARGETING APPROPRIATED FUNDS FOR RESEARCH 

24 AND DEVELOPMENT. 

25 Effective as if included in the enactment of the Con26 solidated Appropriations Act, 2005 (Public Law 108– 
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1 447), under the heading relating to ‘‘Public Health and 

2 Social Services Emergency Fund’’ under title II of division 

3 F, strike ‘‘, and if determined necessary by the Secretary, 

4 the purchase of influenza vaccine,’’. 

5 SEC. 4. ELIMINATION OF PRICE CAP FOR THE PURCHASE 

6 OF INFLUENZA VACCINES. 

7 (a) IN GENERAL.— 

8 (1) VACCINES FOR CHILDREN PROGRAM.—Sec9 tion 1928(d)(3) of the Social Security Act (42 

10 U.S.C. 1396s(d)(3)) is amended— 

11 (A) in subparagraph (B), by striking 

12 ‘‘With’’ and inserting ‘‘Except as provided in 

13 subparagraph (D), with’’; and 

14 (B) by adding at the end the following new 

15 subparagraph: 

16 ‘‘(D) NONAPPLICATION TO INFLUENZA

17 VACCINES.—With respect to contracts entered 

18 into for the purchase of a pediatric vaccine that 

19 is an influenza vaccine, and to the maximum 

20 extent practicable, with respect to any other 

21 contracts entered into by the Secretary for the 

22 purchase of an influenza vaccine, the price for 

23 the purchase of such vaccine shall be estab24 lished without regard to subparagraph (B).’’. 
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1 (2) EFFECTIVE DATE.—The amendments made 

2 by paragraph (1) shall apply to contracts entered 

3 into on or after the date of enactment of this Act. 

4 (b) APPLICATION TO PURCHASES FOR OTHER FED5 ERAL PROGRAMS.—Section 1928(d)(3)(D) of the Social 

6 Security Act (42 U.S.C. 1396s(d)(3)(D)), as amended by 

7 subsection (a), shall apply with respect to the purchase 

8 of an influenza vaccine by any Federal agency and in lieu 

9 of the price that would otherwise apply to such a purchase 

10 under the schedule for the purchase of drugs by the Vet11 erans Administration under section 8126 of title 38, 

12 United States Code, under agreements negotiated by the 

13 Secretary of Health and Human Services under section 

14 340B of the Public Health Service Act (42 U.S.C. 256b), 

15 or otherwise. 

16 SEC. 5. INCENTIVES FOR THE CONSTRUCTION OF INFLU17 ENZA VACCINE MANUFACTURING FACILITIES. 

18 (a) INFLUENZA VACCINE MANUFACTURING FACILI19 TIES INVESTMENT TAX CREDIT.— 

20 (1) ALLOWANCE OF CREDIT.—Section 46 of the 

21 Internal Revenue Code of 1986 (relating to amount 

22 of investment credit) is amended by striking ‘‘and’’ 

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

24 at the end of paragraph (2) and inserting ‘‘, and’’, 
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1 and by adding at the end the following new para2 graph: 

3 ‘‘(3) the influenza vaccine manufacturing facili4 ties investment credit.’’. 

5 (2) AMOUNT OF CREDIT.—Section 48 of such 

6 Code is amended by adding at the end the following 

7 new subsection: 

8 ‘‘(c) INFLUENZA VACCINE MANUFACTURING FACILI9 TIES INVESTMENT CREDIT.— 

10 ‘‘(1) IN GENERAL.—For purposes of section 46, 

11 the influenza vaccine manufacturing facilities invest12 ment credit for any taxable year is an amount equal 

13 to 20 percent of the qualified investment for such 

14 taxable year. 

15 ‘‘(2) QUALIFIED INVESTMENT.—For purposes 

16 of paragraph (1), the qualified investment for any 

17 taxable year is the basis of each influenza vaccine 

18 manufacturing facilities property placed in service by 

19 the taxpayer during such taxable year. 

20 ‘‘(3) INFLUENZA VACCINE MANUFACTURING FA21 CILITIES PROPERTY.—For purposes of this sub22 section, the term ‘influenza vaccine manufacturing 

23 facilities property’ means real and tangible personal 

24 property— 
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1 ‘‘(A)(i) the original use of which com2 mences with the taxpayer, or 

3 ‘‘(ii) which is acquired through purchase 

4 (as defined by section 179(d)(2)), 

5 ‘‘(B) which is depreciable under section 

6 167, 

7 ‘‘(C) which is used for the manufacture, 

8 distribution, or research and development of in9 fluenza vaccines, and 

10 ‘‘(D) which is in compliance with any 

11 standards and regulations which are promul12 gated by the Food and Drug Administration, 

13 the Occupational Safety and Health Adminis14 tration, or the Environmental Protection Agen15 cy and which are applicable to such property. 

16 ‘‘(4) CERTAIN PROGRESS EXPENDITURE RULES

17 MADE APPLICABLE.—Rules similar to rules of sub18 sections (c)(4) and (d) of section 46 (as in effect on 

19 the day before the date of the enactment of the Rev20 enue Reconciliation Act of 1990) shall apply for pur21 poses of this subsection. 

22 ‘‘(5) TERMINATION.—This subsection shall not 

23 apply to any property placed in service after Decem24 ber 31, 2014.’’. 

25 (b) TECHNICAL AMENDMENTS.— 
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1 (1) Subparagraph (C) of section 49(a)(1) of the 

2 Internal Revenue Code of 1986 is amended by strik3 ing ‘‘and’’ at the end of clause (ii), by striking the 

4 period at the end of clause (iii) and inserting 

5 ‘‘, and’’, and by adding at the end the following new 

6 clause: 

7 ‘‘(iv) the basis of any influenza vac8 cine manufacturing facilities property.’’. 

9 (2) Subparagraph (E) of section 50(a)(2) of 

10 such Code is amended by inserting ‘‘or 48(c)(4)’’ be11 fore the period. 

12 (3)(A) The section heading for section 48 of 

13 such Code is amended to read as follows: 

14 ‘‘SEC. 48. OTHER CREDITS.’’. 

15 (B) The table of sections for subpart E of part 

16 IV of subchapter A of chapter 1 of such Code is 

17 amended by striking the item relating to section 48 

18 and inserting the following: 

‘‘Sec. 48. Other credits.’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to property placed in service after 

21 December 31, 2004, under rules similar to the rules of 

22 section 48(m) of the Internal Revenue Code of 1986 (as 

23 in effect on the day before the date of enactment of the 

24 Revenue Reconciliation Act of 1990). 

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