,,ii #aaith ,,congress #ast ,session ,s4 #ccbe ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #c1 #bjbe,ms4 ,rosen 7for herself and ,mr4 ,curtis7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide rules for determining the tax-exempt status of organizations that manufacture and distribute drugs and medical devices to meet public health needs1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,expanding ,access to ,affordable ,drugs and ,medical ,devices ,act4 #b4 ,treatment of public interest drug or medical device health care organizations 7a7 ,in general ,section #eja of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7s7 ,treatment of public interest drug or medical device health care organizations 7#a7 ,in general ,an organization that has been designated as a public interest drug or medical device health care organization under this subsection shall not fail to be treated as an organization described in subsection 7c77#c7 solely because such organization1 either directly or by contract1 manufactures or distributes drugs or medical devices in a manner consistent with its designation under this subsection4 7#b7 ,eligibility for designation 7,a7 ,in general ,the ,secretary may designate an organization that1 either directly or by contract1 manufactures or distributes drugs or medical devices as a public interest drug or medical device health care organization under this subsection if the ,secretary1 in consultation with the ,secretary of ,health and ,human ,services1 determines that-- 7i7 the primary purpose of such organization is making eligible drugs or medical devices affordable1 7ii7 such organization is created or organized in the ,united ,states and primarily operated in the ,united ,states1 7iii7 such organization is not controlled by a person which is not exempt from tax under section #eja7;a71 and 7iv7 such organization meets the organizational requirements of subparagraph 7,b74 7,b7 ,organizational requirements 7i7 ,in general ,an organization meets the requirements of this subparagraph if-- 7,i7 no more than the applicable number of members of the board the organization is also a board member or executive staff member of a disqualified entity1 and 7,,ii7 no executive staff member of the organization is also a board member or executive staff member of a disqualified entity4 7ii7 ,applicable number ,for purposes of subparagraph 7,b77i71 the applicable number is-- 7,i7 in the case of an organization with less than #c board members1 zero1 and 7,,ii7 in the case of any other organization1 #a4 7iii7 ,exception for wholly owned subsidiaries ,an organization shall not be treated as failing to meet the requirements of clause 7i7 with respect to any board member or executive staff member of the organization if-- 7,i7 the disqualified entity is a wholly owned subsidiary of the organization1 and 7,,ii7 the board member or executive staff member serves a similar role with respect to such wholly owned subsidiary4 7iv7 ,exception if no business transaction ,clause 7i77,,ii7 shall not apply if the organization and the disqualified entity are prohibited from engaging in business transactions with each other4 7,c7 ,disqualified entity ,for purposes of subparagraph 7,b71 the term disqualified entity means1 with respect to any organization described in subparagraph 7,b77i71 any person which-- 7i7 is in the trade or business of manufacturing or distributing drugs or medical devices1 and 7ii7 is not exempt from tax under section #eja7;a74 7#c7 ,eligible drug or medical device 7,a7 ,in general ,for purposes of this section1 the term eligible drug or medical device means any drug or medical device if the ,secretary 7in consultation with the ,secretary of ,health and ,human ,services7 determines that such drug or medical device-- 7i7 meets the requirements of either clause 7i7 or 7ii7 of subparagraph 7,b72 and 7ii7 meets the requirements of at least one other clause of such subparagraph4 7,b7 ,requirements ,the requirements of this subparagraph with respect to any drug or medical device are as follows3 7i7 ,the drug or medical device is in shortage 7as defined in1 as applicable1 section #ejf;,c7h7 or section #ejf;,j7j7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cef;c7h72 #cef;j7j771 or1 with respect to an over-the-counter drug1 as determined by the ,secretary of ,health and ,human ,services71 nationwide or in a part of the ,united ,states 7determined through geographic area or population group71 or is at risk of such shortage4 7ii7 ,the manufacture or distribution of the drug or medical device is expected to significantly reduce-- 7,i7 the cost of such drug or device for patients directly or indirectly 7which may be determined through savings to the ,medicare plan under title ,,xviii of the ,social ,security ,act 7#db ,u4,s4,c4 #acie et seq471 the ,medicaid program under title ,,xix of such ,act 7#db ,u4,s4,c4 #acif et seq471 or within the health system71 or 7,,ii7 in the case of a novel drug or device1 reduce the costs compared to current standard of care 7which may be determined by taking into account reduced hospitalizations and other medically related expenses or price in comparison to other available products with similar approved uses74 7iii7 ,the manufacture or distribution of the drug or medical device is expected to address a currently unmet health need4 7iv7 ,the manufacture or distribution of the drug is expected to address a public health need identified by the ,secretary 7in consultation with the ,secretary of ,health and ,human ,services71 or to address supply needs for drugs and devices used during public health or other national emergencies4 7#d7 ,request for designation ,an organization may request to be designated as a public interest drug or medical device health care organization under this subsection by submitting to the ,secretary the following3 7,a7 ,evidence that the manufacturer or distributor currently has1 or has plans to develop1 the ability to manufacture or distribute a drug or medical device which is an eligible drug or medical device4 7,b7 ,an agreement that1 in the event that the ,secretary of ,health and ,human ,services identifies a need to supplement the strategic national stockpile with a drug or medical device designated under this subsection1 the manufacturer or distributor will give the ,secretary priority access to purchase such drug or device1 at a cost that is not more than the average cost price offered to other purchasers1 in a quantity that is equivalent to at least #be percent of the manufacturer's production or the distributor's stock at the time of the request for designation1 until the need identified by the ,secretary has been met4 ,nothing in an agreement under subparagraph 7,b7 shall be construed to prohibit an organization from supplying the identified drug or medical device to any other person at the time or in the manner as required under a contract entered into before the date such drug or device is identified by the ,secretary under subparagraph 7,b74 7#e7 ,definitions ,for purposes of this section-- 7,a7 ,drug ,the term drug means a drug approved under section #eje of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee7 or licensed under section #cea of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #beb74 7,b7 ,medical device ,the term medical device has the meaning given the term device in section #bja7;h7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cba7;h774 7#f7 ,regulations and guidance ,the ,secretary 7in consultation with the ,secretary of ,health and ,human ,services7 shall issue such regulations or other guidance as is necessary to carry out the purposes of this subsection1 including regulations or other guidance-- 7,a7 establishing affordability guidelines and cost transparency requirements for purposes of determining whether an organization meets the requirements of paragraph 7#b77;,a7 with respect to any eligible drug or medical device1 including taking into account the sustainability of operations1 capital expenditures1 research and development1 and maintenance of reasonable reserves1 7,b7 determining what constitutes an unmet health need for purposes of paragraph 7#c77;,b77iii71 and 7,c7 for monitoring the continued compliance of the requirements of this subsection for organizations designated as public interest drug or medical device health care organizations4 4 7b7 ,excess benefits 7#a7 ,in general ,section #dieh7;f77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of subparagraph 7,e71 by striking the period at the end of subparagraph 7,f7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,g7 which involves public interest drug or medical device health care organization 7within the meaning of section #eja7s771 any person who provides funding to such organization which is not permissible funding4 4 7#b7 ,permissible funding ,section #dieh7;f7 of such ,code is amended by adding at the end the following new paragraph3 7#i7 ,permissible funding ,for purposes of paragraph 7#a77;,g71 the term permissible funding means funding from-- 7,a7 amounts which do not exceed #a percent of the gross receipts of such organization for the taxable year of the organization in which such amount is received1 7,b7 amounts received pursuant to grants from or contracts with any governmental entity or organization which is exempt from tax under section #eja7;a71 or 7,c7 amounts provided in connection with the purchase of drugs or medical devices 7other than purchases from any disqualified entity 7as defined in section #eja7s77#b77;,c7774 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date that is one year after the date of the enactment of this ,act4