FDAnews Drug Daily Bulletin

SEC CLEARS ACCOUNTING HURDLE FOR VACCINES SOLD TO STOCKPILES

Dec. 14, 2005
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Drug manufacturers that provide vaccines for government stockpiles can recognize revenue from the sales immediately instead of having to wait to book the sales until the drugs are distributed, according to the SEC.

The SEC clarified the vaccine accounting issue in a recent interpretive release intended to alleviate concerns raised by members of Congress that past SEC guidance "may have the unintended consequence of causing some vaccine manufacturers to decline to participate in these critical stockpile programs."

Although medical product manufacturers have historically recognized stockpile revenue when products are initially sold to the HHS, some lawmakers have expressed fears that recent interpretations of SEC accounting guidelines have required the deferral of revenue recognition until the products are ultimately drawn down from the stockpile.

Senate Budget Committee Chairman Judd Gregg (R-N.H.) and Sen. Richard Burr (R-N.C.) sent a letter to the SEC requesting that immediate revenue recognition be allowed for medical products purchased by the federal government and held in national stockpiles.

"Such a policy will promote a robust stockpile program and help ensure completion of future stockpile requests by permitting manufacturers to realize revenues for fulfilled stockpile orders," the senators said.

To date, the SEC said it is not aware of a vaccine manufacturer declining to participate in a government stockpile program because of accounting concerns, but the agency noted that the new guidance will "remove the accounting questions from the debate."

Under the new SEC guidance, the following products would be subject to immediate revenue recognition when sold to the federal government for the purpose of stockpiling: childhood disease vaccines; influenza vaccines; and other vaccines and countermeasures sold to the federal government for placement in the Strategic National Stockpile.