[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2465 Introduced in Senate (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.
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