I 

114TH CONGRESS 

1ST SESSION H. R. 3539 

To amend the Internal Revenue Code of 1986 to allow a credit against 

tax for clinical testing expenses for qualified infectious disease drugs 

and rapid diagnostic tests. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 17, 2015 

Mr. BOUSTANY (for himself, Mr. THOMPSON of California, Mr. PAULSEN, Mr. 

SHIMKUS, and Mr. GENE GREEN of Texas) 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 a 

credit against tax for clinical testing expenses for qualified infectious disease drugs and rapid diagnostic tests. 

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 ‘‘Reinvigorating Anti5 biotic and Diagnostic Innovation Act of 2015’’. 

6 SEC. 2. CLINICAL TESTING EXPENSES FOR QUALIFIED IN7 FECTIOUS DISEASE PRODUCTS. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45S. CLINICAL TESTING EXPENSES FOR QUALIFIED 

4 INFECTIOUS DISEASE PRODUCTS. 

5 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

6 the qualified infectious disease product credit determined 

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

8 to 50 percent of the qualified clinical testing expenses for 

9 the taxable year. 

10 ‘‘(b) QUALIFIED CLINICAL TESTING EXPENSES.— 

11 For purposes of this section— 

12 ‘‘(1) QUALIFIED CLINICAL TESTING EX13 PENSES.— 

14 ‘‘(A) IN GENERAL.—Except as otherwise 

15 provided in this paragraph, the term ‘qualified 

16 clinical testing expenses’ means the amounts 

17 which are paid or incurred by the taxpayer dur18 ing the taxable year which would be described 

19 in subsection (b) of section 41 if such sub20 section were applied with the modifications set 

21 forth in subparagraph (B). 

22 ‘‘(B) MODIFICATIONS.—For purposes of 

23 subparagraph (A), subsection (b) of section 41 

24 shall be applied— 


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1 ‘‘(i) by substituting ‘clinical testing’ 

2 for ‘qualified research’ each place it ap3 pears in paragraphs (2) and (3) of such 

4 subsection, and 

5 ‘‘(ii) by substituting ‘100 percent’ for 

6 ‘65 percent’ in paragraph (3)(A) of such 

7 subsection. 

8 ‘‘(C) EXCLUSION FOR AMOUNTS FUNDED

9 BY GRANTS, ETC.—The term ‘qualified clinical 

10 testing expenses’ shall not include any amount 

11 to the extent such amount is funded by any 

12 grant, contract, or otherwise by another person 

13 (or any governmental entity). 

14 ‘‘(D) SPECIAL RULE.—For purposes of 

15 this paragraph, section 41 shall be deemed to 

16 remain in effect for periods after enactment of 

17 this section. 

18 ‘‘(2) CLINICAL TESTING.— 

19 ‘‘(A) IN GENERAL.—The term ‘clinical 

20 testing’ means any human clinical testing— 

21 ‘‘(i) which is carried out under an ex22 emption for a drug being tested as an anti23 biotic or antifungal drug under section 

24 505(i) of the Federal Food, Drug, and 


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1 Cosmetic Act (or regulations issued under 

2 such section), 

3 ‘‘(ii) which occurs before the date on 

4 which an application with respect to such 

5 drug is approved under section 505(b) of 

6 such Act or, if the drug is a biological 

7 product, before the date on which a license 

8 for such drug is issued under section 351 

9 of the Public Health Service Act, and 

10 ‘‘(iii) which is conducted by or on be11 half of the taxpayer to whom exemption 

12 under section 505(i) of such Act is grant13 ed. 

14 ‘‘(B) TESTING MUST BE RELATED TO USE

15 AS QUALIFIED INFECTIOUS DISEASE PROD16 UCT.—Human clinical testing shall be taken 

17 into account under subparagraph (A) only to 

18 the extent such testing is related to the use of 

19 the drug as a qualified infectious disease prod20 uct. 

21 ‘‘(c) COORDINATION WITH CREDIT FOR INCREASING

22 RESEARCH EXPENDITURES.— 

23 ‘‘(1) IN GENERAL.—Except as provided in para24 graph (2), any qualified clinical testing expenses for 

25 a taxable year to which an election under this secVerDate Sep 11 2014 02:20 Sep 22, 2015 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3539.IH H3539

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1 tion applies shall not be taken into account for pur2 poses of determining the credit allowable under sec3 tion 41 for such taxable year. 

4 ‘‘(2) EXPENSES INCLUDED IN DETERMINING

5 BASE PERIOD RESEARCH EXPENSES.—Any qualified 

6 clinical testing expenses for any taxable year which 

7 are qualified research expenses (within the meaning 

8 of section 41(b)) shall be taken into account in de9 termining base period research expenses for pur10 poses of applying section 41 to subsequent taxable 

11 years. 

12 ‘‘(d) DEFINITIONS AND SPECIAL RULES.— 

13 ‘‘(1) QUALIFIED INFECTIOUS DISEASE PROD14 UCT.—For purposes of this section, the term ‘quali15 fied infectious disease product’ means any drug or 

16 biological product for human use that— 

17 ‘‘(A) is intended to treat a serious or life18 threatening infection, including those caused 

19 by— 

20 ‘‘(i) an antibacterial or antifungal re21 sistant pathogen (including novel or emerg22 ing infectious pathogens), or 

23 ‘‘(ii) qualifying pathogens listed by 

24 the Secretary of Health and Human Serv25 ices under section 505E(f) of the Federal 


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1 Food, Drug, and Cosmetic Act (21 U.S.C. 

2 351 et seq.), and 

3 ‘‘(B) is intended to treat an infection for 

4 which there is an unmet medical need as de5 fined by the Secretary of Health and Human 

6 Services. 

7 ‘‘(2) SPECIAL LIMITATION ON FOREIGN TEST8 ING.— 

9 ‘‘(A) IN GENERAL.—No credit shall be al10 lowed under this section with respect to any 

11 clinical testing conducted outside the United 

12 States unless— 

13 ‘‘(i) such testing is conducted outside 

14 the United States because there is an in15 sufficient testing population in the United 

16 States, and 

17 ‘‘(ii) such testing is conducted by a 

18 United States person or by any other per19 son who is not related to the taxpayer to 

20 whom exemption under section 505(i) of 

21 the Federal Food, Drug, and Cosmetic Act 

22 is granted. 

23 ‘‘(B) INSUFFICIENT TESTING POPU24 LATION.—For purposes of this section, the test25 ing population in the United States is insuffiVerDate Sep 11 2014 02:20 Sep 22, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3539.IH H3539

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1 cient if there are not within the United States 

2 the number of available and appropriate human 

3 subjects needed to produce reliable and timely 

4 data from the clinical investigation. 

5 ‘‘(3) CERTAIN RULES MADE APPLICABLE.— 

6 Rules similar to the rules of paragraphs (1) and (2) 

7 of section 41(f) shall apply for purposes of this sec8 tion. 

9 ‘‘(4) ELECTION.—This section shall apply to 

10 any taxpayer for any taxable year only if such tax11 payer elects (at such time and in such manner as 

12 the Secretary may by regulations prescribe) to have 

13 this section apply for such taxable year. 

14 ‘‘(e) TRANSFERABILITY.— 

15 ‘‘(1) IN GENERAL.—Any taxpayer holding a 

16 credit under this section may transfer for valuable 

17 consideration unused but otherwise allowable credit 

18 for use by a qualified pharmaceutical research tax19 payer. A taxpayer that transfers any amount of 

20 credit under this section shall file a notification of 

21 such transfer to the Secretary in accordance with 

22 procedures and forms prescribed by the Secretary. 

23 ‘‘(2) USE OF TRANSFERRED CREDIT.—Any 

24 qualified pharmaceutical research taxpayer that re25 ceives credit that has been transferred shall use such 


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1 credit for the taxable year in which the transfer oc2 curred. Any unused amounts of such credit may be 

3 carried back or forward to other taxable years in ac4 cordance with section 39. 

5 ‘‘(3) DEFINITION OF QUALIFIED PHARMA6 CEUTICAL RESEARCH TAXPAYER.—For purposes of 

7 this section, the term ‘qualified pharmaceutical re8 search taxpayer’ means any domestic corporation the 

9 primary mission of which is pharmaceutical research 

10 or development.’’. 

11 (b) MADE PART OF BUSINESS CREDIT.—Section 

12 38(b) of such Code is amended by striking ‘‘plus’’ at the 

13 end of paragraph (35), by striking the period at the end 

14 of paragraph (36) and inserting ‘‘, plus’’, and by adding 

15 at the end the following new paragraph: 

16 ‘‘(37) the qualified infectious disease product 

17 credit determined under section 45S(a).’’. 

18 (c) CLERICAL AMENDMENTS.—The table of sections 

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

20 of such Code is amended by adding at the end the fol21 lowing new item: 

‘‘45S. Clinical testing expenses for qualified infectious disease products.’’. 

22 (d) EFFECTIVE DATE.—The amendment made by 

23 this section shall apply to amounts paid or incurred after 

24 the date of the enactment of this Act. 


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1 SEC. 3. CLINICAL TESTING EXPENSES FOR RAPID INFEC2 TIOUS DISEASES DIAGNOSTIC TESTS. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986, as amended by section 2, is amended by adding at 

6 the end the following new section: 

7 ‘‘SEC. 45T. CLINICAL TESTING EXPENSES FOR RAPID IN8 FECTIOUS DISEASES DIAGNOSTIC TESTS. 

9 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

10 the credit determined under this section for the taxable 

11 year is an amount equal to 50 percent of the qualified 

12 clinical testing expenses for the taxable year. 

13 ‘‘(b) QUALIFIED CLINICAL TESTING EXPENSES.— 

14 For purposes of this section— 

15 ‘‘(1) QUALIFIED CLINICAL TESTING EX16 PENSES.— 

17 ‘‘(A) IN GENERAL.—Except as otherwise 

18 provided in this paragraph, the term ‘qualified 

19 clinical testing expenses’ means the amounts 

20 which are paid or incurred by the taxpayer dur21 ing the taxable year which would be described 

22 in subsection (b) of section 41 if such sub23 section were applied with the modifications set 

24 forth in subparagraph (B). 


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1 ‘‘(B) MODIFICATIONS.—For purposes of 

2 subparagraph (A), subsection (b) of section 41 

3 shall be applied— 

4 ‘‘(i) by substituting ‘clinical testing’ 

5 for ‘qualified research’ each place it ap6 pears in paragraphs (2) and (3) of such 

7 subsection, and 

8 ‘‘(ii) by substituting ‘100 percent’ for 

9 ‘65 percent’ in paragraph (3)(A) of such 

10 subsection. 

11 ‘‘(C) EXCLUSION FOR AMOUNTS FUNDED

12 BY GRANTS, ETC.—The term ‘qualified clinical 

13 testing expenses’ shall not include any amount 

14 to the extent such amount is funded by any 

15 grant, contract, or otherwise by another person 

16 (or any governmental entity). 

17 ‘‘(D) SPECIAL RULE.—For purposes of 

18 this paragraph, section 41 shall be deemed to 

19 remain in effect for periods after enactment of 

20 this section. 

21 ‘‘(2) CLINICAL TESTING.— 

22 ‘‘(A) IN GENERAL.—The term ‘clinical 

23 testing’ means any human clinical testing— 

24 ‘‘(i) which is carried out under an ex25 emption for a device being tested under 


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1 section 520(g) of the Federal Food, Drug, 

2 and Cosmetic Act (or regulations issued 

3 under such section), 

4 ‘‘(ii) which is related only to such use 

5 as a qualified rapid infectious diseases di6 agnostic test, 

7 ‘‘(iii) which occurs before the date on 

8 which an application with respect to such 

9 device receives premarket approval, if re10 quired, under section 515 of such Act, or 

11 receives clearance, if required, under sec12 tion 510(k) of such Act, and 

13 ‘‘(iv) which is conducted by or on be14 half of the taxpayer to whom the exemp15 tion under section 520(g) of such Act was 

16 granted. 

17 ‘‘(c) COORDINATION WITH CREDIT FOR INCREASING

18 RESEARCH EXPENDITURES.— 

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (2), any qualified clinical testing expenses for 

21 a taxable year to which an election under this sec22 tion applies shall not be taken into account for pur23 poses of determining the credit allowable under sec24 tion 41 for such taxable year. 


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1 ‘‘(2) EXPENSES INCLUDED IN DETERMINING

2 BASE PERIOD RESEARCH EXPENSES.—Any qualified 

3 clinical testing expenses for any taxable year which 

4 are qualified research expenses (within the meaning 

5 of section 41(b)) shall be taken into account in de6 termining base period research expenses for pur7 poses of applying section 41 to subsequent taxable 

8 years. 

9 ‘‘(d) DEFINITIONS AND SPECIAL RULES.— 

10 ‘‘(1) QUALIFIED RAPID INFECTIOUS DISEASES

11 DIAGNOSTIC TEST.—For purposes of this section, 

12 the term ‘qualified rapid infectious diseases diag13 nostic test’ means an in-vitro diagnostic (IVD) de14 vice that provides results in less than four hours and 

15 that is used to identify or detect the presence, con16 centration, or characteristics of a serious or life17 threatening infection, including those caused by (1) 

18 an antibacterial or antifungal resistant pathogen, in19 cluding novel or emerging infectious pathogens or 

20 (2) qualifying pathogens listed by the Secretary of 

21 Health and Human Services under Chapter V (21 

22 U.S.C. 351 et seq.) section 505E(f). 

23 ‘‘(2) SPECIAL LIMITATION ON FOREIGN TEST24 ING.— 


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1 ‘‘(A) IN GENERAL.—No credit shall be al2 lowed under this section with respect to any 

3 clinical testing conducted outside the United 

4 States unless— 

5 ‘‘(i) such testing is conducted outside 

6 the United States because there is an in7 sufficient testing population in the United 

8 States, and 

9 ‘‘(ii) such testing is conducted by a 

10 United States person or by any other per11 son who is not related to the taxpayer to 

12 whom the exemption under section 520(g) 

13 of Federal Food, Drug, and Cosmetic Act 

14 was granted. 

15 ‘‘(B) INSUFFICIENT TESTING POPU16 LATION.—For purposes of this section, the test17 ing population in the United States is insuffi18 cient if there are not within the United States 

19 the number of available and appropriate human 

20 subjects needed to produce reliable and timely 

21 data from the clinical investigation. 

22 ‘‘(3) CERTAIN RULES MADE APPLICABLE.— 

23 Rules similar to the rules of paragraphs (1) and (2) 

24 of section 41(f) shall apply for purposes of this sec25 tion. 


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1 ‘‘(4) ELECTION.—This section shall apply to 

2 any taxpayer for any taxable year only if such tax3 payer elects (at such time and in such manner as 

4 the Secretary may by regulations prescribe) to have 

5 this section apply for such taxable year. 

6 ‘‘(e) TRANSFERABILITY.— 

7 ‘‘(1) IN GENERAL.—Any taxpayer holding a 

8 credit under this section may transfer for valuable 

9 consideration unused but otherwise allowable credit 

10 for use by a qualified diagnostics research taxpayer. 

11 A taxpayer that transfers any amount of credit 

12 under this section shall file a notification of such 

13 transfer to the Secretary in accordance with proce14 dures and forms prescribed by the Secretary. 

15 ‘‘(2) USE OF TRANSFERRED CREDIT.—Any 

16 qualified diagnostics research taxpayer that receives 

17 credit that has been transferred shall use such credit 

18 for the taxable year in which the transfer occurred. 

19 Any unused amounts of such credit may be carried 

20 back or forward to other taxable years in accordance 

21 with section 39. 

22 ‘‘(3) DEFINITION OF QUALIFIED DIAGNOSTICS

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1 payer’ means any domestic corporation that de2 rives— 

3 ‘‘(A) any gross income from research or 

4 development on diagnostic tests used to identify 

5 or detect the presence, concentration or charac6 teristics of a serious or life-threatening infec7 tious disease or pathogen; or 

8 ‘‘(B) any gross income from research or 

9 development on qualified infectious disease 

10 products within the meaning given to such term 

11 in section 505E(g) of the Federal, Food, Drug, 

12 and Cosmetic Act; or 

13 ‘‘(C) more than 50 percent of its gross in14 come from activities related to health care.’’. 

15 (b) MADE PART OF BUSINESS CREDIT.—Section 

16 38(b) of such Code, as amended by section 2, is amended 

17 by striking ‘‘plus’’ at the end of paragraph (36), by strik18 ing the period at the end of paragraph (37) and inserting 

19 ‘‘, plus’’, and by adding at the end the following new para20 graph: 

21 ‘‘(38) the credit determined under section 

22 45T(a).’’. 

23 (c) CLERICAL AMENDMENT.—The table of sections 

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


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1 of such Code, as amended by section 2, is amended by 

2 adding at the end the following new item: 

‘‘Sec. 45T. Clinical testing expenses for rapid infectious diseases diagnostic 

tests.’’. 

3 (d) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to amounts paid or incurred after 

5 the date of the enactment of this Act. 

Æ 


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