SEC Eases Revenue Accounting Rule for Vaccine Makers
The Securities and Exchange Commission (SEC), on Monday, announced a change in accounting guidance for pharmaceutical companies supplying vaccines to the Pediatric Vaccine Stockpile or the Strategic National Stockpile. Under the new guidance, vaccine manufacturers can recognize revenue upon delivery to government stockpiles rather than delaying revenue recognition until the vaccine is distributed.
The new guidance was accepted by unanimous vote on November 28, Reuters reports, but was not announced until Monday, pending White House approval. The new guidance goes into effect immediately.
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The intent of the change in guidance was to “remove the accounting questions from the debate” regarding the vaccine stockpile programs, according to the SEC. Further, the SEC states that they are unaware of any instance of vaccine manufacturers refusing to participate in the stockpile programs based on these revenue accounting issues, while acknowledging that questions have been raised as to whether such a circumstance could be an unintended consequence of previous accounting guidelines. Among those raising questions, according to Reuters, were Republican Senators Judd Gregg (New Hampshire), Richard Burr (North Carolina) and Michael Enzi (Wyoming), as well as Democratic Senators Christopher Dodd (Connecticut) and Jack Reed (Rhode Island).
“We’ve heard from several U.S. Senators,” SEC spokesman John Nester acknowledged to Reuters, “and we appreciate their concerns.”
The vaccine stockpile programs are unique. What is purchased is not the actual vaccine, but a contract requiring certain quantities of the vaccine be delivered on a moment’s notice in the event of potentially catastrophic outbreaks of diseases ranging from flu pandemics to so-called childhood diseases. It is the hope of both parties that the vaccines will not be needed, however, the limited shelf life of the vaccines requires that supplies and suppliers be rotated regularly.
The new guidance applies to:
- Childhood disease vaccines
- Influenza vaccines and
- Other vaccines and countermeasures sold to the Federal Government for placement in the Strategic National Stockpile.
Additional information on the guidance is available online from the SEC web site at www.sec.gov/rules/interp/33-8642.pdf.