‘‘(2) MANUFACTURER’S WAGE BASE.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—The manufacturer’s
wage base for any taxable year is equal to the
total amount of wages paid during such taxable
year by the manufacturer to eligible employees
in Puerto Rico with respect to the manufacture
of single source drugs and innovator multiple
source drugs.
‘‘(B) ELIGIBLE
EMPLOYEES.—The term
‘eligible employee’ means any employee of the
manufacturer (as defined in section 3121(d))
who is a bona fide resident of Puerto Rico and
subject to tax by Puerto Rico on income from
sources within and without Puerto Rico during
the entire taxable year.
‘‘(C) WAGES.—The term ‘wages’ has the
meaning given such term by section 3121(a).
‘‘(3) REDUCTION PERCENTAGE.—For purposes
of this subsection—
‘‘(A) IN
GENERAL.—The reduction per-
centage for any drug for any taxable year is the
percentage determined by multiplying—
‘‘(i) the sales percentage for such
drug for such taxable year, by
‘‘(ii) the price increase percentage for
such drug for such taxable year.
‘‘(B) SALES PERCENTAGE.—The sales per-
centage for any drug for any taxable year is the
percentage determined by dividing—
‘‘(i) the total sales of such drug by
the manufacturer for such taxable year, by
‘‘(ii) the total sales of all single source
drugs and innovator multiple source drugs
by the manufacturer for such taxable year.
‘‘(C) PRICE INCREASE PERCENTAGE.—The
price increase percentage for any drug for any
taxable year is the percentage determined by
multiplying—
‘‘(i) 20, times
‘‘(ii) the excess (if any) of—
‘‘(I) the percentage increase in
the average manufacturer’s price for
such drug for the taxable year over
such average price for the base tax-
able year, over
‘‘(II) the percentage increase in
the Consumer Price Index (as defined
in section 1(g)(5)) for the taxable
year over the base taxable year.
‘‘(D) TOTAL SALES.—
‘‘(i) DOMESTIC
SALES
ONLY.—Total
sales shall only include sales for use or
consumption in the United States.
‘‘(ii) SALES
TO
RELATED
PARTIES
NOT INCLUDED.—Total sales shall not in-
clude sales to any related party (as defined
in section 267(b)).
‘‘(E) 
AVERAGE
MANUFACTURER’S
PRICE.—The term ‘average manufacturer’s
price’ for any taxable year means the average
price paid to the manufacturer by wholesalers
or direct buyers and purchasers for each single
source drug or innovator multiple source drug
sold to the various classes of purchasers.
‘‘(F) BASE TAXABLE YEAR.—The base tax-
able year for any single source drug or innova-
tor multiple source drug is the later of—
‘‘(i) the last taxable year ending in
1991, or
‘‘(ii) the first taxable year beginning
after the date on which the marketing of
such drug begins.
‘‘(4) OTHER
DEFINITIONS.—For purposes of
this subsection—
‘‘(A) MANUFACTURER.—
‘‘(i) IN GENERAL.—The term ‘manu-
facturer’ means any person which is en-
gaged in—
‘‘(I) the production, preparation,
propagation, 
compounding, 
conver-
sion, or processing of prescription
drug products, either directly or indi-
rectly by extraction from substances
of natural origin, or independently by
means of chemical synthesis, or by a
combination of extraction and chemi-
cal synthesis, or
‘‘(II) in the packaging, repackag-
ing, labeling, relabeling, or distribu-
tion of prescription drug products.
Such term does not include a wholesale
distributor of drugs or a retail pharmacy
licensed under State law.
‘‘(ii) 
CONTROLLED
GROUPS.—For
purposes of clause (i)—
‘‘(I) CONTROLLED
GROUP
OF
CORPORATIONS.—All 
corporations
which are members of the same con-
trolled group of corporations shall be
treated as 1 person. For purposes of
the preceding sentence, the term ‘con-
trolled group of corporations’ has the
meaning given to such term by section
1563(a), except that ‘more than 50
percent’ shall be substituted for ‘at
least 80 percent’ each place it appears
in section 1563(a)(1), and the deter-
mination shall be made without re-
gard 
to 
subsections 
(a)(4) 
and
(e)(3)(C) of section 1563.
‘‘(II) PARTNERSHIPS, 
PROPRI-
ETORSHIPS, ETC., WHICH ARE UNDER
COMMON
CONTROL.—Under regula-
tions prescribed by the Secretary, all
trades or business (whether or not in-
corporated) which are under common
control shall be treated as 1 person.
The regulations prescribed under this
subclause shall be based on principles
similar to the principles which apply
in the case of subclause (I).
‘‘(B) SINGLE
SOURCE
DRUG.—The term
‘single source drug’ means a drug or biological
which is produced or distributed under an origi-
nal new drug application or product licensing
application, including a drug product or biologi-
cal marketed by any cross-licensed producers or
distributors operating under the new drug ap-
plication or product licensing application.
‘‘(C) 
INNOVATOR
MULTIPLE
SOURCE
DRUG.—The term ‘innovator multiple source
drug’ means a multiple source drug (within the
meaning of section 1927(k)(7)(A)(i) of the So-
cial Security Act) that was originally marketed
under an original new drug application or a
product licensing application approved by the
Food and Drug Administration.
‘‘(5) SPECIAL
RULES.—For purposes of this
subsection—
‘‘(A) DOSAGE
TREATMENT.—Except as
provided by the Secretary, each dosage form
and strength of a single source drug or innova-
tor multiple source drug shall be treated as a
separate drug.
‘‘(B) ROUNDING OF PERCENTAGES.—Any
percentage shall be rounded to the nearest hun-
dredth of a percent.’’.