I
106TH CONGRESS
2D SESSION
H. R. 3665
To amend the Internal Revenue Code of 1986 to deny tax benefits for
research conducted by pharmaceutical companies where United States
consumers pay higher prices for the products of that research than
consumers in certain other countries.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 15, 2000
Mr. STARK 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 deny tax
benefits for research conducted by pharmaceutical com-
panies where United States consumers pay higher prices
for the products of that research than consumers in
certain other countries.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Prescription Price Eq-
uity Act of 2000’’.
SEC. 2. DENIAL OF TAX BENEFITS FOR RESEARCH CON-
DUCTED BY PHARMACEUTICAL COMPANIES
WHERE THE PRODUCTS OF THAT RESEARCH
ARE 
SOLD 
AT 
HIGHER 
PRICES 
IN 
THE
UNITED STATES THAN IN CERTAIN OTHER
COUNTRIES.
(a) IN GENERAL.—Part IX of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items not deductible) is amended by adding at the end
the following new section:
‘‘SEC. 280I. BENEFITS FOR RESEARCH CONDUCTED BY
PHARMACEUTICAL COMPANIES WHERE THE
PRODUCTS OF THAT RESEARCH ARE SOLD AT
HIGHER PRICES IN THE UNITED STATES
THAN IN CERTAIN OTHER COUNTRIES.
‘‘(a) IN GENERAL.—If a worldwide affiliated group
has any disqualified gross receipts from any developed for-
eign country for any calendar year, then the applicable
percentage of the research-related tax benefits shall not
be allowed to any taxpayer which is a member of such
group for such taxpayer’s taxable year ending within such
calendar year.
‘‘(b) DEFINITIONS.—For purpose of this section—
‘‘(1) DISQUALIFIED
GROSS
RECEIPTS.—The
term ‘disqualified gross receipts’ means, with respect
to any developed foreign country, gross receipts of
the worldwide affiliated group from prescription
drugs manufactured or produced by any member of
such group and sold for use or consumption in such
country if such gross receipts are at least 5 percent
less than the amount which would be such gross re-
ceipts were such drugs sold at their respective aver-
age manufacturing prices charged by members of
such group in the United States.
‘‘(2) DEVELOPED
FOREIGN
COUNTRY.—The
term ‘developed foreign country’ means any foreign
country which is a member of the Organisation for
Economic Co-operation and Development.
‘‘(3) APPLICABLE
PERCENTAGE.—The term
‘applicable 
percentage’ 
means 
the 
percentage
which—
‘‘(A) the aggregate disqualified gross re-
ceipts of the worldwide affiliated group, bears
to
‘‘(B) the aggregate gross receipts of such
group from all prescription drugs which are
manufactured or produced by members of such
group.
‘‘(4) RESEARCH-RELATED TAX BENEFITS.—The
term ‘research-related tax benefits’ means the bene-
fits provided by—
‘‘(A) section 41 (relating to credit for in-
creasing research activities),
‘‘(B) section 45C (relating to clinical test-
ing expenses for certain drugs for rare diseases
or conditions), and
‘‘(C) section 174 (relating to research and
experimental expenditures).
‘‘(5) WORLDWIDE
AFFILIATED
GROUP.—The
term ‘worldwide affiliated group’ means any affili-
ated group as defined in section 1504 (determined
without regard to paragraphs (3) and (4) of
1504(b)).
‘‘(c) CAPITALIZATION
OF
EXPENDITURES
FOR
WHICH TAX BENEFIT DENIED.—Expenditures to which
section 174 does not apply by reason of this section shall
be treated for purposes of section 197 (relating to amorti-
zation of goodwill and certain other intangibles) as a sec-
tion 197 intangible acquired on the last day of the taxable
year in which such expenditures are paid or incurred.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part IX is amended by adding at the end the
following new item:
‘‘Sec. 280I. Benefits for research conducted by pharmaceutical
companies where the products of that research are
sold at higher prices in the United States than in
certain other countries.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
Æ