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Senate Majority Leader Bill Frist, R-Tenn., said the vaccine liability provision will be eliminated from legislation creating the new Department of Homeland Security. Deleting the vaccine liability will be included in a catchall spending bill Congress is expected to pass later in the month, he added.

The vaccine provision was slipped into the Homeland Security bill shortly before its passage in November. A bipartisan group of lawmakers complained the provision had no role in a Homeland Security bill. In order to win passage of the Homeland Security bill, congressional leaders agreed to delete the measure in subsequent legislation.

Lilly, in a statement, said "the process by which this legislation was enacted was not desirable, and (the company) fully understands the action taken by the Senate."

The Senate reached an agreement that eliminates the liability item and also calls on the Senate to pass a comprehensive reform to the Vaccine Injury Compensation program in the next six months.

Lilly said it hoped the new legislation "will incorporate the vaccine ingredient language that was included in the Homeland Security Act."

Lilly, which manufactured the mercury-based compound thimerosal, was the primary beneficiary of the provision. Lilly is suffering a spate of class actions lawsuits based upon the claim that thimerosal may be linked to autism. While the Federal Drug Administration says there is no scientific evidence for such a link, it notes that many manufacturers have reduced the levels of mercury in vaccines or turned to non-mercury based additives.

"There is no denying that autism is a devastating diagnosis for many families and Lilly expresses profound sympathy for these families," the company's statement said. "However, the lawsuits that have been filed against Lilly and other manufacturers are not supported by science."

Lilly has said it has asked for similar legislation, but did not asked that it be included in the Homeland Security bill.

- Rob Wells, Dow Jones Newswires; 202-862-9272; rob.wells@dowjones.com