S 1010 IS
106th CONGRESS
1st Session
S. 1010
To amend the Internal Revenue Code of 1986 to provide for a medical
innovation tax credit for clinical testing research expenses attributable to
academic medical centers and other qualified hospital research
organizations.
IN THE SENATE OF THE UNITED STATES
May 11, 1999
Mr. JEFFORDS (for himself, Mr. ROCKEFELLER, Mrs. HUTCHISON, Mrs. FEINSTEIN,
and Mrs. BOXER) introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide for a medical
innovation tax credit for clinical testing research expenses attributable to
academic medical centers and other qualified hospital research
organizations.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. CREDIT FOR CLINICAL TESTING RESEARCH EXPENSES ATTRIBUTABLE TO
CERTAIN QUALIFIED ACADEMIC INSTITUTIONS INCLUDING TEACHING HOSPITALS.
(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to business related credits) is
amended by inserting after section 41 the following:
`SEC. 41A. CREDIT FOR MEDICAL INNOVATION EXPENSES.
`(a) GENERAL RULE- For purposes of section 38, the medical innovation
credit determined under this section for the taxable year shall be an amount
equal to 20 percent of the excess (if any) of--
`(1) the qualified medical innovation expenses for the taxable year,
over
`(2) the medical innovation base period amount.
`(b) QUALIFIED MEDICAL INNOVATION EXPENSES- For purposes of this
section--
`(1) IN GENERAL- The term `qualified medical innovation expenses' means
the amounts which are paid or incurred by the taxpayer during the taxable
year directly or indirectly to any qualified academic institution for
clinical testing research activities.
`(2) CLINICAL TESTING RESEARCH ACTIVITIES-
`(A) IN GENERAL- The term `clinical testing research activities' means
human clinical testing conducted at any qualified academic institution in
the development of any product, which occurs before--
`(i) the date on which an application with respect to such product
is approved under section 505(b), 506, or 507 of the Federal Food, Drug,
and Cosmetic Act,
`(ii) the date on which a license for such product is issued under
section 351 of the Public Health Service Act, or
`(iii) the date classification or approval of such product which is
a device intended for human use is given under section 513, 514, or 515
of the Federal Food, Drug, and Cosmetic Act.
`(B) PRODUCT- The term `product' means any drug, biologic, or medical
device.
`(3) QUALIFIED ACADEMIC INSTITUTION- The term `qualified academic
institution' means any of the following institutions:
`(A) EDUCATIONAL INSTITUTION- A qualified organization described in
section 170(b)(1)(A)(iii) which is owned or affiliated with an institution
of higher education as described in section 3304(f).
`(B) TEACHING HOSPITAL- A teaching hospital which--
`(i) is publicly supported or owned by an organization described in
section 501(c)(3), and
`(ii) is affiliated with an organization meeting the requirements of
subparagraph (A).
`(C) FOUNDATION- A medical research organization described in section
501(c)(3) (other than a private foundation) which is affiliated with, or
owned by--
`(i) an organization meeting the requirements of subparagraph (A),
or
`(ii) a teaching hospital meeting the requirements of subparagraph
(B).
`(D) CHARITABLE RESEARCH HOSPITAL- A hospital that is designated as a
cancer center by the National Cancer Institute.
`(4) EXCLUSION FOR AMOUNTS FUNDED BY GRANTS, ETC- The term `qualified
medical innovation expenses' shall not include any amount to the extent such
amount is funded by any grant, contract, or otherwise by another person (or
any governmental entity).
`(c) MEDICAL INNOVATION BASE PERIOD AMOUNT- For purposes of this section,
the term `medical innovation base period amount' means the average annual
qualified medical
innovation expenses paid by the taxpayer during the 3-taxable year period
ending with the taxable year immediately preceding the first taxable year of the
taxpayer beginning after December 31, 1998.
`(1) LIMITATION ON FOREIGN TESTING- No credit shall be allowed under
this section with respect to any clinical testing research activities
conducted outside the United States.
`(2) CERTAIN RULES MADE APPLICABLE- Rules similar to the rules of
subsections (f) and (g) of section 41 shall apply for purposes of this
section.
`(3) ELECTION- This section shall apply to any taxpayer for any taxable
year only if such taxpayer elects to have this section apply for such
taxable year.
`(4) COORDINATION WITH CREDIT FOR INCREASING RESEARCH EXPENDITURES AND
WITH CREDIT FOR CLINICAL TESTING EXPENSES FOR CERTAIN DRUGS FOR RARE
DISEASES- Any qualified medical innovation expense for a taxable year to
which an election under this section applies shall not be taken into account
for purposes of determining the credit allowable under section 41 or 45C for
such taxable year.
`(e) TERMINATION- This section shall not apply to any expense paid or
incurred after the date specified in section 41(h)(1)(B).'.
(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT-
(1) IN GENERAL- Section 38(b) of such Code (relating to current year
business credits) is amended by striking `plus' at the end of paragraph
(11), by striking the period at the end of paragraph (12) and inserting `,
plus', and by adding at the end the following:
`(13) the medical innovation expenses credit determined under section
41A(a).'.
(2) TRANSITION RULE- Section 39(d) of such Code is amended by adding at
the end the following new paragraph:
`(9) NO CARRYBACK OF SECTION 41A CREDIT BEFORE ENACTMENT- No portion of
the unused business credit for any taxable year which is attributable to the
medical innovation credit determined under section 41A may be carried back
to a taxable year beginning before January 1, 1999.'.
(c) DENIAL OF DOUBLE BENEFIT- Section 280C of such Code is amended by
adding at the end the following new subsection:
`(d) CREDIT FOR INCREASING MEDICAL INNOVATION EXPENSES-
`(1) IN GENERAL- No deduction shall be allowed for that portion of the
qualified medical innovation expenses (as defined in section 41A(b))
otherwise allowable as a deduction for the taxable year which is equal to
the amount of the credit determined for such taxable year under section
41A(a).
`(2) CERTAIN RULES TO APPLY- Rules similar to the rules of paragraphs
(2), (3), and (4) of subsection (c) shall apply for purposes of this
subsection.'.
(d) DEDUCTION FOR UNUSED PORTION OF CREDIT- Section 196(c) of such Code
(defining qualified business credits) is amended by resdesignating paragraphs
(5) through (8) as paragraphs (6) through (9), respectively, and by inserting
after paragraph (4) the following new paragraph:
`(5) the medical innovation expenses credit determined under section
41A(a) (other than such credit determined under the rules of section
280C(d)(2)),'.
(e) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by adding after the item
relating to section 41 the following:
`Sec. 41A. Credit for medical innovation expenses.'.
(f) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1998.
END