I

107TH CONGRESS

1ST SESSION H. R. 946

To amend the Internal Revenue Code of 1986 to allow drug manufacturers

a credit against income tax if they certify that the price of a drug

in the United States market is not greater than its price in the Canadian

or Mexican market.

IN THE HOUSE OF REPRESENTATIVES

MARCH 8, 2001

Mr. DUNCAN introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow drug

manufacturers a credit against income tax if they certify

that the price of a drug in the United States market

is not greater than its price in the Canadian or Mexican

market.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘North American Pre5 scription Price Equity Act of 2001’’.
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1 SEC. 2. CREDIT TO DRUG MANUFACTURERS SELLING IN

2 THE U.S. MARKET AT PRICES NOT GREATER

3 THAN PRICES IN CANADIAN OR MEXICAN

4 MARKET.

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of

7 1986 (relating to business related credits) is amended by

8 inserting after section 45D the following new section:

9 ‘‘SEC. 45E. CREDIT TO DRUG MANUFACTURERS SELLING IN

10 THE U.S. MARKET AT PRICES NOT GREATER

11 THAN PRICES IN CANADIAN OR MEXICAN

12 MARKET.

13 ‘‘(a) IN GENERAL.—For purposes of section 38, in

14 the case of a taxpayer who manufactures any qualified

15 prescription drug, the drug pricing credit determined

16 under this section for the taxable year is an amount equal

17 to 5 percent of the wholesale price of the drug with respect

18 to sales during the.

19 ‘‘(b) QUALIFIED PRESCRIPTION DRUG.—For pur20 poses of this section, the term ‘qualified prescription drug’

21 means any prescription drug if—

22 ‘‘(1) there are substantial sales of such drug in

23 the Canadian or Mexican markets, and

24 ‘‘(2) there is a certification by the manufac25 turer that the wholesale price of the drug in the

26 United States market is not greater than the whole-
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1 sale price of the drug in the Canadian and Mexican

2 markets.’’

3 (b) CREDIT MADE PART OF GENERAL BUSINESS

4 CREDIT.—

5 (1) IN GENERAL.—Subsection (b) of section 38

6 of such Code (relating to current year business cred7 it) is amended by striking ‘‘plus’’ at the end of para8 graph (12), by striking the period at the end of

9 paragraph (13) and inserting ‘‘, plus’’, and by add10 ing at the end thereof the following new paragraph:

11 ‘‘(14) the drug pricing credit determined under

12 section 45E(a).’’.

13 (2) LIMITATION ON CARRYBACK.—Subsection

14 (d) of section 39 of such Code is amended by adding

15 at the end the following new paragraph:

16 ‘‘(10) NO CARRYBACK OF DRUG PRICING CRED17 IT BEFORE EFFECTIVE DATE.—No portion of the

18 unused business credit for any taxable year which is

19 attributable to the credit determined under section

20 45E may be carried back to any taxable year ending

21 before the date of the enactment of this para22 graph.’’.

23 (3) DEDUCTION FOR CERTAIN UNUSED BUSI24 NESS CREDITS.—Subsection (c) of section 196 of

25 such Code is amended by striking ‘‘and’’ at the end
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1 of paragraph (8), by striking the period at the end

2 of paragraph (9) and inserting ‘‘, and’’, and by add3 ing after paragraph (9) the following new para4 graph:

5 ‘‘(10) the drug pricing credit determined under

6 section 45E.’’.

7 (d) CLERICAL AMENDMENT.—The table of sections

8 for subpart D of part IV of subchapter A of chapter 1

9 of such Code is amended by inserting after the item relat10 ing to section 45D the following new item:

‘‘Sec. 45E. Credit to drug manufacturers selling in the U.S. market at prices not greater than prices in Canadian

or Mexican market.’’.

11 (e) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 the date of the enactment of this Act.

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