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.

January 24, 2005

Mr. INHOFE introduced the following bill; which was read twice and referred to the Committee on Finance

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.

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 `Flu Vaccine Incentive Act of 2005' or the `FLU-VIA'.

SEC. 2. FINDINGS.

Congress makes the following findings:

(1) 30 years ago, more than a dozen companies produced the influenza vaccine in the United States. As of 2004, only 2 companies make the vaccine for the United States.

(2) Currently, the influenza vaccine is grown in eggs through a process that takes approximately 6 months and consumes tens of thousands of eggs.

(3) Companies are developing new technologies for the faster and safer production of the influenza vaccine. For example, one manufacturer is testing a process that relies on cell lines from silk moths, a technique that promises to shave the production time by at least a month and reduce the costs significantly.

(4) The United States should do all that it can to encourage research and development of new technologies for the production of influenza vaccines.

SEC. 3. TARGETING APPROPRIATED FUNDS FOR RESEARCH AND DEVELOPMENT.

Effective as if included in the enactment of the Consolidated Appropriations Act, 2005 (Public Law 108-447), under the heading relating to `Public Health and Social Services Emergency Fund' under title II of division F, strike `, and if determined necessary by the Secretary, the purchase of influenza vaccine,'.

SEC. 4. ELIMINATION OF PRICE CAP FOR THE PURCHASE OF INFLUENZA VACCINES.

(a) In General-

(1) VACCINES FOR CHILDREN PROGRAM- Section 1928(d)(3) of the Social Security Act (42 U.S.C. 1396s(d)(3)) is amended--

(A) in subparagraph (B), by striking `With' and inserting `Except as provided in subparagraph (D), with'; and

(B) by adding at the end the following new subparagraph:

`(D) NONAPPLICATION TO INFLUENZA VACCINES- With respect to contracts entered into for the purchase of a pediatric vaccine that is an influenza vaccine, and to the maximum extent practicable, with respect to any other contracts entered into by the Secretary for the purchase of an influenza vaccine, the price for the purchase of such vaccine shall be established without regard to subparagraph (B).'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply to contracts entered into on or after the date of enactment of this Act.

(b) Application to Purchases for Other Federal Programs- Section 1928(d)(3)(D) of the Social Security Act (42 U.S.C. 1396s(d)(3)(D)), as amended by subsection (a), shall apply with respect to the purchase of an influenza vaccine by any Federal agency and in lieu of the price that would otherwise apply to such a purchase under the schedule for the purchase of drugs by the Veterans Administration under section 8126 of title 38, United States Code, under agreements negotiated by the Secretary of Health and Human Services under section 340B of the Public Health Service Act (42 U.S.C. 256b), or otherwise.

SEC. 5. INCENTIVES FOR THE CONSTRUCTION OF INFLUENZA VACCINE MANUFACTURING FACILITIES.

(a) Influenza Vaccine Manufacturing Facilities Investment Tax Credit-

(1) ALLOWANCE OF CREDIT- Section 46 of the Internal Revenue Code of 1986 (relating to amount of investment credit) is amended by striking `and' at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting `, and', and by adding at the end the following new paragraph:

`(3) the influenza vaccine manufacturing facilities investment credit.'.

(2) AMOUNT OF CREDIT- Section 48 of such Code is amended by adding at the end the following new subsection:

`(c) Influenza Vaccine Manufacturing Facilities Investment Credit-

`(1) IN GENERAL- For purposes of section 46, the influenza vaccine manufacturing facilities investment credit for any taxable year is an amount equal to 20 percent of the qualified investment for such taxable year.

`(2) QUALIFIED INVESTMENT- For purposes of paragraph (1), the qualified investment for any taxable year is the basis of each influenza vaccine manufacturing facilities property placed in service by the taxpayer during such taxable year.

`(3) INFLUENZA VACCINE MANUFACTURING FACILITIES PROPERTY- For purposes of this subsection, the term `influenza vaccine manufacturing facilities property' means real and tangible personal property--

`(A)(i) the original use of which commences with the taxpayer, or

`(ii) which is acquired through purchase (as defined by section 179(d)(2)),

`(B) which is depreciable under section 167,

`(C) which is used for the manufacture, distribution, or research and development of influenza vaccines, and

`(D) which is in compliance with any standards and regulations which are promulgated by the Food and Drug Administration, the Occupational Safety and Health Administration, or the Environmental Protection Agency and which are applicable to such property.

`(4) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE- Rules similar to rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.

`(5) TERMINATION- This subsection shall not apply to any property placed in service after December 31, 2014.'.

(b) Technical Amendments-

(1) Subparagraph (C) of section 49(a)(1) of the Internal Revenue Code of 1986 is amended by striking `and' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting `, and', and by adding at the end the following new clause:

`(iv) the basis of any influenza vaccine manufacturing facilities property.'.

(2) Subparagraph (E) of section 50(a)(2) of such Code is amended by inserting `or 48(c)(4)' before the period.

(3)(A) The section heading for section 48 of such Code is amended to read as follows:

`SEC. 48. OTHER CREDITS.'.

(B) The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 48 and inserting the following:

`Sec. 48. Other credits.'.

(c) Effective Date- The amendments made by this section shall apply to property placed in service after December 31, 2004, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of enactment of the Revenue Reconciliation Act of 1990).

END