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DRUG INDUSTRY R&D TAX CREDITS EYED BY REP. STARK IN LIGHT OF VACCINE PRICE HIKES

Executive Summary

Vaccine price increases are leading House Ways & Means/Health Subcommittee Chairman Stark (D-Calif.) to "question" the need for manufacturer R&D tax credits, according to subcommittee staffers. In a Jan. 9 press release, the California Democrat observed that diphtheria-pertussis-tetanus (DPT) vaccine prices have increased 6,950% during the last decade. He also pointed out that the price of the measles-mumps-rubella (MMR) vaccine has also increased significantly. Stark's press release notes that a DPT vaccination that cost 12 in 1980 now costs $8.46, while the cost of an MMR vaccination has jumped from $2.71 in 1980 to $16.18. However, some of that price increase was created by Congress, which in 1986 enacted a federally insured childhood vaccine injury program. A tax collected on each marketed vaccine dose goes into a trust fund for compensating children injured by adverse reactions to the vaccine products. "The profits made by the pharmaceutical companies on these vaccines are not public knowledge, [so] we do not know, and cannot know, whether the companies are making a respectable and conscionable profit or an outrageous and irresponsible profit," Stark said. "Before Congress extends tax breaks again in September for the drug manufacturers, we should get an explanation of this insane price inflation and a commitment to work together for better health for all Americans." Congress extended R&D tax credits through September 1990 in the Omnibus Budget Reconciliation Act of 1989, signed into law Dec. 19. The credits likely will be considered again this year during the budget reconciliation process. Staffers said that Stark has not yet approached either industry or federal agencies about the vaccine price issue. * Last spring, Stark wrote a "Dear Colleague" letter to counter drug industry lobbying for the tax credit. He contended that "an industry whose net profit margin is consistently twice that of industry as a whole" should not be subsidized through tax credits ("The Pink Sheet" April 10, p. 12). "Even if you don't have children, you are paying for this inflation through your taxes," Stark continued. "We are all paying through tax breaks for the pharmaceutical companies, through support of public clinics overburdened with families unable to afford the price of the vaccines, and by taxes to pay for sick children too poor to afford insurance." He noted that there have been increases in cases of mumps, measles and rubella because some parents cannot afford to have their children vaccinated.

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