HR 5219 IH

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.

September 20, 2000

Ms. PELOSI (for herself and Ms. DUNN) introduced the following bill; which was referred to the Committee on Ways and Means

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.

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. 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 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 EXPENSES-

`(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 RESEARCH EXPENSES-

`(i) LIMITATION ON EXPENSES TAKEN INTO ACCOUNT- The amount of other vaccine research expenses with respect to any vaccine or microbicide which may be taken into account under this section 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 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; INCREASED INCENTIVE 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 paragraph (3)(C) if--

`(i) in the case of human clinical testing 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 included 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 vaccine 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 INCENTIVE 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 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 RESEARCH-

`(i) 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.

`(ii) MICROBICIDE- The term `microbicide' means a substance used topically 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 infection 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 expense 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 paragraph (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 determining base period research expenses for purposes of applying section 41 to subsequent taxable years.

`(d) SPECIAL RULES-

`(1) DENIAL OF CREDIT FOR CERTAIN FOREIGN 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 conducted outside the United States if the Director of the Centers for Disease Control and Prevention determines that there is an insufficient testing population in the United States.

`(C) SPECIAL LIMITATION FOR CORPORATIONS TO WHICH SECTION 936 APPLIES- No credit shall be allowed under this section with respect to any activities conducted by a corporation 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 section.

`(3) ELECTION- This section shall apply to any taxpayer for any taxable year only if such taxpayer elects to have this section apply for such taxable 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 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 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 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 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 such Code (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 such Code 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 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 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 utilizing technology transfer, differential pricing, in-country production, or other mechanisms to maximize international access 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 vaccine 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 stimulating vaccine research.

SEC. 3. 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) 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 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 purposes 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 Development).

`(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 paragraph by--

`(i) the Food and Drug Administration,

`(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 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, and

`(B) $125,000,000 for each of years 2007 through 2010.

`(2) ALLOCATION OF LIMITATION- The limitation amount under paragraph (1) shall be allocated for any calendar year by the Administrator of the United States Agency for International Development among organizations with an application approved by the Administrator. The Administrator shall prescribe the procedures for applications for an allocation under this subsection and the factors to be taken into account in making such allocations. Such applications shall be made at such time and in such form and manner as the Administrator shall prescribe and shall include a detailed 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. 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 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) 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 such Code 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 after December 31, 2001, in taxable years ending after such date.

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