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.

January 27, 2003

Mr. DUNCAN introduced the following bill; which was referred to the Committee on Ways and Means

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.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `North American Prescription Price Equity Act of 2003'.

SEC. 2. CREDIT TO DRUG MANUFACTURERS SELLING IN THE U.S. MARKET AT PRICES NOT GREATER THAN PRICES IN CANADIAN OR MEXICAN MARKET.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by inserting after section 45F the following new section:

`SEC. 45G. CREDIT TO DRUG MANUFACTURERS SELLING IN THE U.S. MARKET AT PRICES NOT GREATER THAN PRICES IN CANADIAN OR MEXICAN MARKET.

`(a) IN GENERAL- For purposes of section 38, in the case of a taxpayer who manufactures any qualified prescription drug, the drug pricing credit determined under this section for the taxable year is an amount equal to 5 percent of the wholesale price of the drug with respect to sales during the?

`(b) QUALIFIED PRESCRIPTION DRUG- For purposes of this section, the term `qualified prescription drug' means any prescription drug if--

`(1) there are substantial sales of such drug in the Canadian or Mexican markets, and

`(2) there is a certification by the manufacturer that the wholesale price of the drug in the United States market is not greater than the wholesale price of the drug in the Canadian and Mexican markets.'

(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT-

(1) IN GENERAL- Subsection (b) of section 38 of such Code (relating to current year business credit) is amended by striking `plus' at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting `, plus', and by adding at the end thereof the following new paragraph:

`(16) the drug pricing credit determined under section 45G(a).'.

(2) LIMITATION ON CARRYBACK- Subsection (d) of section 39 of such Code is amended by adding at the end the following new paragraph:

`(11) NO CARRYBACK OF DRUG PRICING CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 45G may be carried back to any taxable year ending before the date of the enactment of this paragraph.'.

(3) DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS- Subsection (c) of section 196 of such Code is amended by striking `and' at the end of paragraph (9), by striking the period at the end of paragraph (10) and inserting `, and', and by adding after paragraph (10) the following new paragraph:

`(11) the drug pricing credit determined under section 45G.'.

(d) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45F the following new item:

`Sec. 45G. Credit to drug manufacturers selling in the U.S. market at prices not greater than prices in Canadian or Mexican market.'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

END