SEC Loosens Revenue-Recognition Rules for Vaccine Stockpile Participants

The US Securities and Exchange Commission (Washington, DC, www.sec.gov) this week issued an interpretive guidance that allows vaccine manufacturers participating in government stockpile programs to recognize revenue at the time the vaccines are added to the stockpile. According to the interpretation, such immediate-revenue recognition applies “even if certain criteria that normally apply to ‘bill and hold’ arrangements are not met.”

Vaccine manufacturers would still be required to meet all other applicable revenue-recognition criteria and to provide “sufficient disclosures for a clear understanding by investors of transactions, the related accounting, and the effect of the alternative accounting method.”

The SEC issued the guidance in response to suggestions and some concerns, reportedly by members of Congress, that the current rules could cause some vaccine manufacturers to decline participation in federal vaccine stockpile programs (see Solomon and Burns,

The Wall Street Journal,

Dec. 6, 2005, p. D5,

www.wsj.com

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