Novartis in tax fight over vaccine plant that HHS helped pay for

When the Department of Health and Human Services agreed to pay for 40% of the cost of a new Novartis ($NVS) plant to reserve space for making vaccines in case of a pandemic, it was a pretty good deal for the Swiss company. But the county that houses the plant thinks Novartis is getting too much of a deal.

An appeals court in North Carolina will now decide if the company is entitled to an exemption on real property taxes for the 40% ostensibly owned by the federal government for now, reports the Charlotte/Raleigh CityBizList.

The matter started in 2006, when the town of Holly Springs, NC, gave Novartis land on which to build its vaccine plant. In 2009, HHS offered to pay $316 million, which was 40% of the cost, and to buy up to 96 million flu vaccines a year from Novartis when the plant was operating. Earlier reports pegged the contract amount at $486 million. In exchange, HHS got the right to produce flu vaccine in the plant in case of a flu pandemic, CityBizList reports. For whatever reason, the terms are that HHS owns 40% of the property until it is built and then Novartis gets full ownership.

Novartis contends that the government owned a 40% share in 2010, exempting Novartis from taxes on that portion. The county says HHS doesn't really own the property since Novartis is guaranteed full ownership when it is complete, and even it if does, that does not exempt Novartis from the taxes.

An announcement in December by HHS about the dedication of the plant calls the relationship a public-private partnership that will last at least 25 years. It says the plant is the first in the U.S. to use a faster and more flexible technology to make influenza vaccine using cultured animal cells instead of the conventional process of using fertilized eggs.

- see the CityBizList story
- read the HHS announcement

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