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

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

How would a surcharge work? Surcharge would be collected by drug companies with each privately- purchased order. 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 Sent to state revenue agency; forwarded to health department

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

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

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

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

Calculating a surcharge (cont.) Need to base it on the number of shots given over a life time. 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.

Vaccine surcharge example Privately- purchased doses/yr Surcharge amount/ dose Amount raised 1,300,000$1.54$2,036,000 1,300,000$2.31$3,003,000

Antigen surcharge example No. of antigens* $/antigen No. of private kids/year Total surcharge /child (over 12 yrs) Amount raised annually 38$1.0550,160$39.87 $2 million 38$1.5750,160$59.81 $3 million * For primary series and adolescent shots

Sales tax example Est. cost of private vaccine/ person* Sales tax Amount Total raised $7385%$40.59$2,036,000 $7388.5%62.73$3,146,500 * For primary series and adolescent shots

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

Conclusions A vaccine surcharge or sales tax could provide very stable and predictable funding for registries. 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. 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. The sales tax is the simplest approach but may be the hardest to enact in the current political environment.

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.

Thank you! Bill Brand, M.P.H. Registry Policy & Planning Coordinator Minnesota Department of Health (612)