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VACCINE EXCISE TAX REINSTATEMENT UNDER BUDGET BILL WILL BRING VACCINE INJURY COMPENSATION PROGRAM ABOUT $100 MIL. A YEAR FOR DTP, DT, MMR AND POLIO CLAIMS

Executive Summary

The permanent reinstatement of the vaccine excise tax will provide the Vaccine Injury Compensation Trust Fund with roughly $100 mil. per year for the payment of claims arising from the administration of certain vaccines. As part of the budget bill signed by President Clinton Aug. 10, the excise tax will again be collected on four vaccines as of Aug. 11: DTP (diphtheria, tetanus and pertussis); DT (diphtheria, tetanus); MMR (measles, mumps and rubella); and polio. Authority to collect the vaccine excise tax expired on Jan. 1 after President Bush vetoed the tax/urban aid package that contained reauthorization of the National Childhood Vaccine Injury Compensation Program. The excise tax is part of the prospective portion of the compensation program, which covers injury and death claims resulting from vaccines administered since the program began in 1988. While 25% of the excise tax collected goes into the general treasury, the remainder is placed into a trust fund from which the government pays any awards granted through its adjudication system for post-1988 administration of covered vaccines. The 1993 budget reconciliation act permanently reinstates the excise tax for the four covered vaccines at its previous rate: DTP -- $4.56 per dose; DT -- 6" per dose; MMR -- $4.44 per dose; and polio -- 29" per dose. The act also provides for a floor stocks tax that applies to any person who holds a taxable vaccine for sale or use on Aug. 10, including hospitals, doctors, and federal, state and local governments. The floor stocks tax, which applies to vaccines bought on or before Aug. 10 without paying the excise tax, must be paid by Feb. 28, 1994. When authority for the vaccine excise tax expired, the U.S. Claims Court also lost authority to receive and forward petitions for compensation for vaccine-related injury or death associated with the administration of a vaccine on or after Oct. 1, 1992. That authority was reinstated as part of a reauthorization bill for the National Institutes of Health that was signed in June. No claims have been made to date for FY 1993 vaccine administration. The compensation program has been netting about $100 mil. each year from its portion of the excise tax, and the trust fund currently contains about $632 mil. As of March 16, 402 petitions had been filed for post-1988 claims, with 118 adjudications. Among the adjudicated petitions, 47 claims were determined to be compensable, 14 not-compensable and 57 claims were dismissed. Awards totaling $27.9 mil. had been paid as of March 16 to petitioners and for attorneys' fees in cases where compensation was denied. While the compensation trust fund is accruing monies more rapidly than it is spending money, the retrospective portion of the vaccine program covering pre-1988 claims, which relies on annual appropriations, faces chronic underfunding despite a boost from the budget reconciliation legislation. The U.S. Claims Court received 4,069 petitions regarding pre- 1988 vaccine administrations from the time of the compensation program's inception until the Jan. 31, 1991 deadline for filing such claims. As of March 16, 1,306 cases had been adjudicated, with 418 deemed compensable, 143 not-compensable and 745 dismissed. The program had paid out $304 mil. in awards on pre- 1988 claims, with an average injury award of $1 mil. In FY 1992, funds for pre-1988 awards had run out in the third quarter. In FY 1993, the funds ran out in the first quarter. The anticipated FY 1993 shortfall was $174.6 mil. This year's budget bill increased annual funding for the vaccine compensation program's pre-1988 claims payments from its previous level of $80 mil. to $110 mil. The program also received a supplemental FY 1993 amount of $30 mil. as part of the Somalia relief program. While, at present, the vaccine compensation trust fund is used only for paying post-1988 claims, some have suggested that the program be permitted to borrow from the trust fund to pay off some of the pre-1988 claims. Such a change would require legislation; HHS has not yet embraced the idea. The total cost of the vaccine excise tax for one course of the recommended series of childhood immunizations through age two comes to $23.55, for both the private and the public sectors. The tax represents 26% of the cost of the vaccines to the public sector, based on the 1992 Centers for Disease Control & Prevention cost of $89.78. The excise tax is 13% of the total 1992 catalog price of $188.19 for the vaccines in the private sector. The tax does not apply to the newer vaccines, Haemophilus b and hepatitis B, which represent about half of the total vaccine expenditures in the private and public sectors.

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