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106TH CONGRESS

2D SESSION S. 3103

To amend the Internal Revenue Code of 1986 to impose a discriminatory

profits tax on pharmaceutical companies which charge prices for prescription drugs to domestic wholesale distributors that exceed the most favored customer prices charged to foreign wholesale distributors.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 25 (legislative day, SEPTEMBER 22), 2000

Mr. LEVIN (for himself and Mr. BRYAN) 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 impose

a discriminatory profits tax on pharmaceutical companies

which charge prices for prescription drugs to domestic

wholesale distributors that exceed the most favored customer prices charged to foreign wholesale distributors.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. IMPOSITION OF DISCRIMINATORY PROFITS

2 TAX ON CERTAIN PRESCRIPTION DRUG MAN3 UFACTURERS.

4 (a) IN GENERAL.—Subtitle D of the Internal Rev5 enue Code of 1986 (relating to miscellaneous excise taxes)

6 is amended by inserting after chapter 44 the following:

7 ‘‘CHAPTER 45—DISCRIMINATORY PROFITS

8 TAX ON CERTAIN PRESCRIPTION

9 DRUG MANUFACTURERS

‘‘Sec. 4986. Imposition of tax.

10 ‘‘SEC. 4986. IMPOSITION OF TAX.

11 ‘‘(a) IN GENERAL.—There is imposed on any tax12 payer who—

13 ‘‘(1) has any gross income attributable to the

14 manufacture or production of prescription drugs for

15 any taxable year, and

16 ‘‘(2) fails to include with its return of tax for

17 such taxable year a statement (in such form and

18 manner as the Secretary may prescribe) which—

19 ‘‘(A) declares the taxpayer’s policy that it

20 does not directly or indirectly charge any whole21 sale distributor located in the United States a

22 higher unit price for any bulk purchase of a

23 prescription drug than the most favored cus24 tomer price it directly or indirectly charges any

25 wholesale distributor located in any covered for-
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1 eign country for any bulk purchase of such

2 drug, and

3 ‘‘(B) is signed, under penalty of perjury,

4 by the chief financial officer or other senior cor5 porate officer with knowledge of the facts,

6 a tax equal to 10 percent of the taxable income of the

7 taxpayer.

8 ‘‘(b) DEFINITIONS.—For purposes of this section—

9 ‘‘(1) COVERED FOREIGN COUNTRY.—The term

10 ‘covered foreign country’ means Canada and any

11 country which is a member of the European Union.

12 ‘‘(2) MOST FAVORED CUSTOMER PRICE.—The

13 term ‘most favored customer price’ means, with re14 spect to any prescription drug, a unit price equal

15 to—

16 ‘‘(A) the best unit price given or available

17 to any wholesale distributor with respect to bulk

18 purchases of such drug if the terms and condi19 tions applicable to such purchases are com20 parable, or

21 ‘‘(B) the best unit price given or available

22 to any wholesale distributor with respect to bulk

23 purchases of such drug with a differential based

24 entirely on costs attributable to differences in

25 the terms and conditions applicable to such
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1 purchases if such terms and conditions are not

2 comparable.’’.

3 (b) DEDICATION OF TAX TO FEDERAL HOSPITAL IN4 SURANCE TRUST FUND.—Section 1817(a) of the Social

5 Security Act (42 U.S.C. 1395i(a)) is amended—

6 (1) by striking ‘‘and’’ at the end of paragraph

7 (1),

8 (2) by striking the period at the end of para9 graph (2) and inserting ‘‘; and’’, and

10 (3) by adding at the end the following new

11 paragraph:

12 ‘‘(3) the taxes imposed by section 4986 of the

13 Internal Revenue Code of 1986.’’.

14 (c) CLERICAL AMENDMENT.—The table of chapters

15 of subtitle D of the Internal Revenue Code of 1986 is

16 amended by inserting after the item relating to chapter

17 44 the following:

‘‘CHAPTER 45. Discriminatory profits tax on certain prescription

drug manufacturers.’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to taxable years beginning after

20 the date of the enactment of this Act.

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