Tax loophole eyed ahead of launch of Sanofi, GSK, AstraZeneca quadrivalent shots

Old laws have a habit of leaving antiquated legal curiosities in force. In the United Kingdom, it is illegal to enter the Houses of Parliament wearing a suit of armor. And as it stands, quadrivalent flu vaccines are exempt from a $0.75-per-dose compensation tax levied on trivalent shots in the U.S.

The inability of the U.S. to tax new quadrivalent vaccines from AstraZeneca's ($AZN) biotech unit MedImmune, GlaxoSmithKline ($GSK) and Sanofi ($SNY) stems from limitations of a 1986 law. When the U.S. began levying the tax to fund the National Vaccine Injury Compensation Program (NVICP) in 1986, quadrivalent vaccines were more than 25 years away from hitting the market. Consequently, the legislation only refers to trivalent vaccines and lacks text to extend the tax to future products. Legislators are now pushing to amend the text.

Earlier this week a bill to close the loophole passed the House by a unanimous floor vote. It will now advance to the Senate, where it is also expected to pass with minimal fuss, Regulatory Focus reports. The Senate has already agreed to approve the bill if it advanced unchanged through the House. Amendments expected to pass into law will expand the scope of the 1986 text to cover any vaccine against seasonal influenza. Currently, the Internal Revenue Code of 1986 refers specifically to trivalent influenza shots in its definition of taxable vaccines.

The 1986 law levies a $0.75-per-dose tax against 16 classes of vaccine to fund compensation for those injured by the shots. Most of the other classes are broadly categorized--any vaccine against measles, for example--but a couple contain stipulations. Trivalent shots are mentioned by name, and conjugate vaccines against Streptococcus pneumoniae are also singled out.

- read the Regulatory Focus article
- here's the amendment
- check out the original law