Exploring a Vaccine Surcharge or Sales Tax for Registry Funding

1. Exploring a Vaccine Surcharge or Sales Tax for Registry Funding Bill Brand, M.P.H. Minnesota Department of Health Immunization Registry Conference October 27, 2003

2. Objectives • To facilitate a discussion on the advantages and challenges of enacting a vaccine surcharge or sales tax to fund registries. • To outline the cost analysis Minnesota conducted

3. How would a surcharge work? • Surcharge would be collected by drug companies with each privately-purchased order. • Surcharge would be applied at either the antigen or the vaccine level. • Sent to state revenue agency; forwarded to health department

4. How would a sales tax work? • A fixed percentage is added to the total purchase price of each order. • Based on the total cost of vaccines, not the number of antigens or vaccines. • Collected by drug companies and sent to state revenue.

5. Why a registry tax? • Funding would be broad based • Total amount raised increases as new vaccines are added • The funding would be stable and predictable • The system would be relatively easy to administer once it was set up.

6. So why NOT have a tax? • A complex system to get enacted and implemented • “No new taxes” • Vaccine revenue for providers would decrease unless plans reimbursed at higher rates • Cost of health care goes up marginally • Although registries save money • New vaccines tend to be expensive, so a sales tax would raise funds disproportionate their added registry costs

7. Calculating a surcharge • First decision: Based on antigen or vaccine/dose? • Antigen: More complex; ensures stable funding as more combo vaccines are approved • Vaccine: Simpler; harder to forecast how much will be raised

8. Calculating a surcharge (cont.) • Need to base it on the number of shots given over a life time. • No way to differentiate for most vaccines which age group they will be given to.

9. Vaccine surcharge example

10. Antigen surcharge example * For primary series and adolescent shots

11. Sales tax example * For primary series and adolescent shots

12. Issues to consider • How will the medical community react? • How will health plans react? • Will the plans reimburse clinics for the added vaccine costs? • How supportive will your legislature and Governor be? • Do you use the funds only for registries or for immunizations more broadly?

13. Conclusions • A vaccine surcharge or sales tax could provide very stable and predictable funding for registries. • Setting the program up would be complex and challenging, but once up, would be relatively simple to administer. • The sales tax is the simplest approach but may be the hardest to enact in the current political environment.

14. Something to consider… If one state passed such a tax, it would likely begin a domino effect in others. The drug companies would then most probably advocate to have a single nation-wide system enacted, administered by CDC. Those funds could then be distributed to states/projects on a per capita formula.

15. Thank you! Bill Brand, M.P.H. Registry Policy & Planning Coordinator Minnesota Department of Health (612) 676-5144 bill.brand@state.mn.us