Fair Advertising and Increased Research (FAIR) Act

Fair Advertising and Increased Research Act - Amends the Internal Revenue Code to prohibit any drug manufacturer from taking a tax deduction for expenditures relating to the advertising, promoting, or marketing of any FDA prescription drug to the extent the aggregate amount of such expenditures exceeds the manufacturer's aggregate research and development expenditures.

Directs the Secretary of the Treasury to estimate amount of additional tax revenues raised by enforcement of the Act, to be allocated to the Federal Hospital Insurance Trust Fund.

[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2486 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2486

 To amend the Internal Revenue Code of 1986 to limit the deduction for 
 advertising of FDA approved prescription drugs by the manufacturer of 
such drugs to the level of such manufacturer's research and development 
                 expenditures, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 8, 2002

 Ms. Stabenow (for herself, Mr. Daschle, Mr. Miller, Mr. Durbin, Mrs. 
 Carnahan, and Mr. Wellstone) 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 limit the deduction for 
 advertising of FDA approved prescription drugs by the manufacturer of 
such drugs to the level of such manufacturer's research and development 
                 expenditures, and for other purposes.

    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 ``Fair Advertising and Increased 
Research (FAIR) Act''.

SEC. 2. LIMITATION ON TAX DEDUCTIONS FOR ADVERTISING BY FDA 
              PRESCRIPTION DRUG MANUFACTURERS.

    (a) In General.--Part IX of subchapter B of chapter 1 of subtitle A 
of the Internal Revenue Code of 1986 (relating to items not deductible) 
is amended by adding at the end the following:

``SEC. 280I. LIMITATION ON TAX DEDUCTIONS FOR ADVERTISING BY FDA 
              PRESCRIPTION DRUG MANUFACTURERS.

    ``(a) In General.--No deduction shall be allowed under this chapter 
for any taxable year for any expenditure relating to the advertising, 
promoting, or marketing (in any medium) of any FDA prescription drug 
manufactured by the taxpayer to the extent the aggregate amount of such 
expenditures exceeds the taxpayer's aggregate research and development 
expenditures for such taxable year.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) FDA prescription drugs.--The term `FDA prescription 
        drug' means any drug or biological approved by the Federal Drug 
        Administration which requires a prescription of a physician for 
        its use by an individual.
            ``(2) Research and development expenditures.--The term 
        `research and development expenditures' means any expenditures 
        which may be treated as expenses under section 174.
            ``(3) Aggregation rules.--All members of the same 
        controlled group of corporations (within the meaning of section 
        52(a)) and all persons under common control (within the meaning 
        of section 52(b)) shall be treated as 1 person.''.
    (b) Conforming Amendment.--The table of sections for such part IX 
is amended by adding after the item relating to section 280H the 
following:

                                  ``Sec. 280I. Limitation on tax 
                                        deductions for advertising by 
                                        FDA prescription drug 
                                        manufacturers.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
    (d) Transfer to the Federal Hospital Insurance Trust Fund of 
Resulting Budgetary Savings.--There is appropriated to the Federal 
Hospital Insurance Trust Fund established under section 1817 of the 
Social Security Act amounts equal to the increase in Federal revenues 
resulting from the amendment made by subsection (a). Such appropriated 
amounts shall be transferred from the general fund of the Treasury on 
the basis of estimates of such revenues made by the Secretary of the 
Treasury.
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