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 distrib-
uted.
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 devel-
oping vaccines against widespread diseases and ensure
that such vaccines are affordable and widely distributed.
Be it enacted by the Senate and House of Representa-
tives 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. CREDIT FOR MEDICAL RESEARCH RELATED TO DE-
VELOPING VACCINES AGAINST WIDESPREAD
DISEASES.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter 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 
WIDE-
SPREAD 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 30 percent of
the qualified vaccine research expenses for the taxable
year.
‘‘(b) QUALIFIED VACCINE RESEARCH EXPENSES.—
For purposes of this section—
‘‘(1) 
QUALIFIED
VACCINE
RESEARCH
EX-
PENSES.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘qualified
vaccine research expenses’ means—
‘‘(i) vaccine clinical testing expenses,
and
‘‘(ii) other vaccine research expenses
(to the extent not taken into account under
this clause for a prior taxable year).
‘‘(B) LIMITATIONS ON OTHER VACCINE RE-
SEARCH EXPENSES.—
‘‘(i) 
LIMITATION
ON
EXPENSES
TAKEN
INTO
ACCOUNT.—The amount of
other vaccine research expenses with re-
spect to any vaccine or microbicide which
may be taken into account under this sec-
tion for any taxable year shall not exceed
25 percent of the vaccine clinical testing
expenses with respect to such vaccine or
microbicide for such year.
‘‘(ii) LIMITATION
ON
CREDIT.—The
amount of credit determined under this
section for any taxable year (determined
without regard to this clause) with respect
to other vaccine research expenses shall be
reduced by the amount of credit allowed in
any prior taxable year with respect to such
expenses under section 41.
‘‘(2) VACCINE CLINICAL TESTING EXPENSES.—
‘‘(A) IN
GENERAL.—The term ‘vaccine
clinical testing expenses’ means the amounts
which are paid or incurred by the taxpayer dur-
ing the taxable year which would be described
in subsection (b) of section 41 if such sub-
section were applied with the modifications set
forth in subparagraph (B).
‘‘(B) MODIFICATIONS; INCREASED INCEN-
TIVE FOR CONTRACT RESEARCH PAYMENTS FOR
COLLABORATIVE
VACCINE
CLINICAL
TESTING
PROJECTS.—For purposes of subparagraph (A),
subsection (b) of section 41 shall be applied—
‘‘(i) by substituting ‘vaccine clinical
testing’ for ‘qualified research’ each place
it appears in paragraphs (2) and (3) of
such subsection, and
‘‘(ii) by substituting ‘100 percent’ for
‘65 percent’ in paragraph (3)(A) of such
subsection.
‘‘(C) VACCINE
CLINICAL
TESTING.—The
term ‘vaccine clinical testing’ means human
clinical testing which is related to the use of
any vaccine or microbicide referred to in para-
graph (3)(C) if—
‘‘(i) in the case of human clinical test-
ing conducted in the United States, such
testing is approved by the Federal Food
and Drug Administration, or
‘‘(ii) in the case of human clinical
testing conducted outside the United
States, such testing is approved by the
Federal Food and Drug Administration or
the appropriate authority of a county in-
cluded in the list under section 802(b)(1)
of the Federal Food, Drug, and Cosmetic
Act.
‘‘(3) OTHER VACCINE RESEARCH EXPENSES.—
‘‘(A) IN GENERAL.—The term ‘other vac-
cine research expenses’ means the amounts
(other than for vaccine clinical testing) which
are paid or incurred by the taxpayer during the
taxable year or any prior 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; INCREASED INCEN-
TIVE FOR CONTRACT RESEARCH PAYMENTS FOR
COLLABORATIVE
VACCINE
RESEARCH
PROJECTS.—For purposes of subparagraph (A),
subsection (b) of section 41 shall be applied—
‘‘(i) by substituting ‘vaccine research’
for ‘qualified research’ each place it ap-
pears in paragraphs (2) and (3) of such
subsection, and
‘‘(ii) by substituting ‘100 percent’ for
‘65 percent’ in paragraph (3)(A) of such
subsection.
‘‘(C) VACCINE RESEARCH.—
‘‘(i) IN GENERAL.—The term ‘vaccine
research’ means research to develop vac-
cines 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 Ad-
ministrator of the United States
Agency for International Develop-
ment) to cause the deaths of over
1,000,000 people worldwide each year.
‘‘(ii) 
MICROBICIDE.—The 
term
‘microbicide’ means a substance used topi-
cally for prevention from infection by an
identified pathogen.
‘‘(iii) VACCINE.—The term ‘vaccine’
means a product using all or portions of
the disease-causing organism or nucleic
acid sequences for prevention from infec-
tion by an identified pathogen.
‘‘(D) ORDERING RULES.—For purposes of
paragraph (1)(B)(ii)—
‘‘(i) other vaccine research expenses
shall be taken into account first from the
taxable year for which the credit under this
section is being determined and then from
earlier taxable years beginning with the
most recent prior year, and
‘‘(ii) credit shall be treated as allowed
under section 41 with respect to any ex-
pense to the extent of the amount that the
credit under section 41 would have been
reduced but for such expense.
‘‘(4) 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).
‘‘(c) COORDINATION WITH CREDIT FOR INCREASING
RESEARCH EXPENDITURES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), 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.
‘‘(2) EXPENSES
INCLUDED
IN
DETERMINING
BASE PERIOD RESEARCH EXPENSES.—Any qualified
vaccine research expenses for any taxable year which
are qualified research expenses (within the meaning
of section 41(b)) shall be taken into account in de-
termining base period research expenses for pur-
poses of applying section 41 to subsequent taxable
years.
‘‘(d) SPECIAL RULES.—
‘‘(1) DENIAL OF CREDIT FOR CERTAIN FOR-
EIGN CLINICAL TESTING AND RESEARCH.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), no credit shall be allowed
under this section with respect to any clinical
testing or research conducted outside the
United States.
‘‘(B) CERTAIN FOREIGN CLINICAL TESTING
ELIGIBLE
FOR
CREDIT.—Subparagraph (A)
shall not apply to human clinical testing con-
ducted outside the United States if the Director
of the Centers for Disease Control and Preven-
tion determines that there is an insufficient
testing population in the United States.
‘‘(C) SPECIAL LIMITATION FOR CORPORA-
TIONS TO WHICH SECTION 936 APPLIES.—No
credit shall be allowed under this section with
respect to any activities conducted by a cor-
poration to which an election under section 936
applies.
‘‘(2) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of paragraphs (1) and (2)
of section 41(f) shall apply for purposes of this sec-
tion.
‘‘(3) ELECTION.—This section shall apply to
any taxpayer for any taxable year only if such tax-
payer elects to have this section apply for such tax-
able year.’’
(b) INCLUSION IN GENERAL BUSINESS CREDIT.—
(1) IN GENERAL.—Section 38(b) of such Code
is amended by striking ‘‘plus’’ at the end of para-
graph (11), by striking the period at the end of
paragraph (12) and inserting ‘‘, plus’’, and by add-
ing 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 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 attrib-
utable 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 sec-
tion 45D.’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C of
such Code 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 al-
lowed for that portion of the qualified vaccine re-
search expenses (as defined in section 45D(b)) oth-
erwise allowable as a deduction for the taxable year
which is equal to the amount of the credit deter-
mined 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 sub-
section (c) shall apply for purposes of this sub-
section.’’.
(d) DEDUCTION FOR UNUSED PORTION OF CRED-
IT.—Section 196(c) of such Code (defining qualified busi-
ness credits) is amended by striking ‘‘and’’ at the end of
paragraph (7), by striking the period at the end of para-
graph (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 deter-
mined 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 such Code is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 45D. Credit for medical research related to developing vac-
cines against widespread diseases.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenses paid or incurred after
December 31, 2000, in taxable years ending after such
date.
(g) DISTRIBUTION OF VACCINES DEVELOPED USING
CREDIT.—It is the sense of the Congress that if 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 corpora-
tion should certify to the Secretary of the Treasury that,
within 1 year after that vaccine is first licensed, such cor-
poration will establish a good faith plan utilizing tech-
nology transfer, differential pricing, in-country produc-
tion, or other mechanisms to maximize international ac-
cess to high quality and affordable vaccines. The preceding
sentence shall not be construed to waive rights to set
prices, patent ownership, or confidentiality of privileged
information.
(h) STUDY.—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 vac-
cine research. Not later than the date which is 5 years
after the date of the enactment of this Act, the Institute
of Medicine shall submit to the Congress the results of
such study together with any recommendations it may
have to improve the effectiveness of such credit in stimu-
lating vaccine research.
SEC. 3. CREDIT FOR CERTAIN SALES OF LIFESAVING VAC-
CINES.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter 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. 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 tax-
payer 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 or to
a government of any foreign country (or
instrumentality of such a government), and
‘‘(ii) for distribution in a developing
country.
‘‘(B) DEVELOPING
COUNTRY.—For pur-
poses of this paragraph, the term ‘developing
country’ means a country which the Secretary
determines to be a country with a lower middle
income or less (as such term is used by the
International Bank for Reconstruction and De-
velopment).
‘‘(3) QUALIFIED VACCINE.—The term ‘qualified
vaccine’ means any vaccine and microbicide—
‘‘(A) 
which 
is 
described 
in 
section
45D(b)(3)(C), and
‘‘(B) which is approved as a new drug
after the date of the enactment of this para-
graph by—
‘‘(i) the Food and Drug Administra-
tion,
‘‘(ii) the World Health Organization,
or
‘‘(iii) the appropriate authority of a
county included in the list under section
802(b)(1) of the Federal Food, Drug, and
Cosmetic Act.
‘‘(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 limita-
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If
the limitation amount under paragraph (1) for any
calendar year exceeds the aggregate amount allo-
cated under paragraph (2), such limitation for the
following calendar year shall be increased by the
amount of such excess. No amount may be carried
under the preceding sentence to any calendar year
after 2020.
‘‘(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 such Code
(relating to current year business credit) 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 fol-
lowing new paragraph:
‘‘(14) the lifesaving vaccine sale credit deter-
mined under section 45E.’’.
(2) TRANSITION RULE.—Section 39(d) of such
Code (relating to transitional rules) 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 attrib-
utable to the lifesaving vaccine sale credit deter-
mined 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 such Code is amended by adding at the end the fol-
lowing 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 after December
31, 2001, in taxable years ending after such date.
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