[Congressional Record (Bound Edition), Volume 145 (1999), Part 19]
[House]
[Pages 27853-27854]
[From the U.S. Government Publishing Office, www.gpo.gov]



              END AMERICAN TAX SUBSIDIES FOR DRUG DUMPING

  The SPEAKER pro tempore (Mr. Ose). Under the Speaker's announced 
policy of January 19, 1999, the gentleman from Texas (Mr. Doggett) is 
recognized during morning hour debates for 5 minutes.
  Mr. DOGGETT. Mr. Speaker, we have all seen the heartbreaking stories 
of huddled masses of refugees after a flood or hurricane, a civil war, 
a natural or manmade disaster, searching for food and water and lost 
family members. It warms our hearts to hear of international aid 
efforts, frequently led by America, to provide those in need with the 
assistance that they require. Congress decided long ago that we should 
reward these outreach efforts through generous tax deductions for 
property or items that are donated to help those most in need, even if 
the recipients are at the four corners of our world.
  While many of these efforts are truly commendable, like those of the 
International Red Cross, others simply represent the dumping of 
worthless products. Under the title, ``In a Wave of Balkan Charity 
Comes Drug Aid of Little Use,'' the New York Times reported this very 
summer how camps filled with refugees from Kosovo received anti-smoking 
inhalers and hemorrhoid treatments instead of much-needed antibiotics.
  The Times reported that ``the outpouring of aid from corporate 
America and elsewhere for more than a million refugees who flooded into 
Albania and Macedonia during the war was indeed vast and included many 
badly-needed medicines. But the World Health Organization said about 
one-third to half of all of the shipments were inappropriate and likely 
to gather dust in warehouses or be destroyed at government expense.''
  Should American taxpayers subsidize the donations of useless 
pharmaceutical products to foreign countries? I think the question 
really answers itself, but this practice continues to occur, encouraged 
by our U.S. tax laws. Normally when a corporation donates property it 
may deduct its cost to produce the item.
  To encourage donations to a charity for needy causes, as is the case 
for these drugs that are destined for foreign relief, our tax laws 
permit a corporation to receive twice its basis. That is fine when the 
drugs are useful, but it is totally unjustified when they are 
worthless. I am filing legislation

[[Page 27854]]

today to prevent this abuse of the enhanced charitable deduction for 
overseas contributions of worthless drugs, and some 50 of my colleagues 
are joining me in this effort.
  A recent study by the Harvard School of Public Health entitled An 
Assessment of U.S. Pharmaceutical Donations concluded that up to 40 
percent of the drugs that are sent abroad were not requested and that 
about one third had less than a year of usefulness remaining. This is 
not a new problem. The New England Journal of Medicine had previously 
described a similar situation surrounding the misery in Bosnia. After 
analyzing about 30,000 metric tons of drugs and medical materials 
donated over a 4-year period, the Journal of Medicine study concluded, 
``in total, we considered 50 to 60 percent of all the medical supplies 
donated to Bosnia and Herzegovina to be inappropriate.'' Over one-third 
of these donations consisted of the dumping of large quantities ``of 
useless or unusable drugs.'' They even included medicine for leprosy, a 
disease not found in these countries, and this is a problem not limited 
to the Balkans. It stretches from Armenia to Papua New Guinea.
  Yet our existing law continues to encourage and subsidize such 
contributions. We should stop this now with straightforward amendments 
to the Internal Revenue Code. These amendments would include requiring 
that there be one year of good shelf life remaining as specified by 
Food and Drug Administration regulations, that drugs be labeled in a 
manner understandable to foreign health professionals, and that 
charities assure the drugs that are sent are drugs that are requested 
and needed by the foreign recipient.
  Said one World Health Organization official, ``if you overload people 
with things that they do not recognize and do not know how to use, 
you're not helping.'' And indeed to those in need around the world, the 
dumping of useless drugs is actually worse than no help at all, since 
such toxic junk must be destroyed by those most in need.
  The Journal of Medicine study estimated that the cost of destroying 
17,000 tons of inappropriate drug donations in the Balkans reached $34 
million. That is $34 million wasted, some of which went to destroy 
drugs subsidized by American taxpayers that never should have been sent 
in the first place.
  The bill that I am filing today has received the support of the 
Partnership for Quality Medical Donations, a group consisting of a 
number of major pharmaceutical companies and international relief 
agencies.
  The provisions of this bill are drawn from the drug donation 
guidelines of the World Health Organization. These guidelines and this 
bill incorporate what are really the ``best practices'' of industry at 
present, but we incorporate these into Federal tax law. Some companies 
have been singled out for public praise, and rightly so, but U.S. tax 
laws provide an incentive for foreign dumping that must end. Let us 
stop rewarding those who have been more interested in obtaining a tax 
deduction than helping those who are truly in need. Let us stop the tax 
subsidies for drug dumping.

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