S 2465 IS
106th CONGRESS
2d Session
S. 2465
To amend the Internal Revenue Code of 1986 to deny tax benefits for
research conducted by pharmaceutical companies where United States consumers pay
higher prices for the products of that research than consumers in certain other
countries.
IN THE SENATE OF THE UNITED STATES
April 26, 2000
Mr. WELLSTONE 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 deny tax benefits for
research conducted by pharmaceutical companies where United States consumers pay
higher prices for the products of that research than consumers in certain other
countries.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Prescription Price Equity Act of 2000'.
SEC. 2. DENIAL OF TAX BENEFITS FOR RESEARCH CONDUCTED BY PHARMACEUTICAL
COMPANIES WHERE THE PRODUCTS OF THAT RESEARCH ARE SOLD AT HIGHER PRICES IN THE
UNITED STATES THAN IN CERTAIN OTHER COUNTRIES.
(a) IN GENERAL- Part IX of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 (relating to items not deductible) is amended by adding
at the end the following new section:
`SEC. 280I. BENEFITS FOR RESEARCH CONDUCTED BY PHARMACEUTICAL COMPANIES
WHERE THE PRODUCTS OF THAT RESEARCH ARE SOLD AT HIGHER PRICES IN THE UNITED
STATES THAN IN CERTAIN OTHER COUNTRIES.
`(a) IN GENERAL- If a worldwide affiliated group has any disqualified
gross receipts from any developed foreign country for any calendar year, then
the applicable percentage of the research-related tax benefits shall not be
allowed to any taxpayer which is a member of such group for such taxpayer's
taxable year ending within such calendar year.
`(b) DEFINITIONS- For purpose of this section--
`(1) DISQUALIFIED GROSS RECEIPTS- The term `disqualified gross receipts'
means, with respect to any developed foreign country, gross receipts of the
worldwide affiliated group from prescription drugs manufactured or produced
by any member of such group and sold for use or consumption in such country
if such gross receipts are at least 5 percent less than the amount which
would be such gross receipts were such drugs sold at their respective
average manufacturing prices charged by members of such group in the United
States.
`(2) DEVELOPED FOREIGN COUNTRY- The term `developed foreign country'
means any foreign country which is a member of the Organization for Economic
Co-operation and Development.
`(3) APPLICABLE PERCENTAGE- The term `applicable percentage' means the
percentage which--
`(A) the aggregate disqualified gross receipts of the worldwide
affiliated group, bears to
`(B) the aggregate gross receipts of such group from all prescription
drugs which are manufactured or produced by members of such
group.
`(4) RESEARCH-RELATED TAX BENEFITS- The term `research-related tax
benefits' means the benefits provided by--
`(A) section 41 (relating to credit for increasing research
activities),
`(B) section 45C (relating to clinical testing expenses for certain
drugs for rare diseases or conditions), and
`(C) section 174 (relating to research and experimental
expenditures).
`(5) WORLDWIDE AFFILIATED GROUP- The term `worldwide affiliated group'
means any affiliated group as defined in section 1504 (determined without
regard to paragraphs (3) and (4) of 1504(b)).
`(c) CAPITALIZATION OF EXPENDITURES FOR WHICH TAX BENEFIT DENIED-
Expenditures to which section 174 does not apply by reason of this section
shall be treated for purposes of section 197 (relating to amortization of
goodwill and certain other intangibles) as a section 197 intangible acquired
on the last day of the taxable year in which such expenditures are paid or
incurred.'
(b) CLERICAL AMENDMENT- The table of sections for such part IX is amended
by adding at the end the following new item:
`Sec. 280I. Benefits for research conducted by pharmaceutical companies where
the products of that research are sold at higher prices in the United States
than in certain other countries.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after the date of the enactment of this Act.
END