Rep. Pelosi Urges Changes to Vaccine Research and Development Tax Proposal

[2] Per our conversation, there are three key provisions of the legislation that Senator Kerry and I have introduced that are left out of the proposal that your staff has brought to Senator Helms. These omissions raise several concerns that must be addressed.

[3] First, I am concerned that the tax credit would only be available on clinical trials and not for preclinical work. It is at the preclinical phase where incentives are needed the most. We need more products in the development pipe line. NIH already subsidizes much clinical trial work for priority vaccines, but there are no incentives for preclinical work. In addition, because the biggest development costs are at the clinical trials phase, the cost of adding a tax credit on preclinical work will be quite modest compared to the credit on clinical trials costs.

[4] Second, I am very concerned that the "pass through" tax credit for smaller companies that have limited tax liability is eliminated from the Administration proposal. Much of the innovation in vaccines is happening at venture capital -- funded start ups. The pass through would help these smaller companies. Obviously, standard tax credits are of limited use to companies that do not yet have substantial tax liability. Perhaps other incentives for smaller companies can be devised, but some incentive for smaller companies should be included in vaccine research and development incentives.

[5] Third, it is unfortunate that the "good faith plan" for access to vaccines from our bill is not included in the proposal. Such a plan would assist efforts by public sector and community based advocates to ensure that industry will be at the table as access to vaccines is planned.

[6] We share the same goal, and we have a great opportunity to get this done. We must take advantage of that opportunity.

[7] Again, thank you for your leadership in this effort and your consideration of my concerns. I look forward to working with you to create a credit that provides the strongest possible incentives for vaccine development in the private sector.

best regards,