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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3325 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3325
To amend the Internal Revenue Code of 1986 to provide rules for
determining the tax-exempt status of organizations that manufacture and
distribute drugs and medical devices to meet public health needs, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 3, 2025
Ms. Rosen (for herself and Mr. Curtis) 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 provide rules for
determining the tax-exempt status of organizations that manufacture and
distribute drugs and medical devices to meet public health needs, 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 ``Expanding Access to Affordable Drugs
and Medical Devices Act''.
SEC. 2. TREATMENT OF PUBLIC INTEREST DRUG OR MEDICAL DEVICE HEALTH CARE
ORGANIZATIONS.
(a) In General.--Section 501 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(s) Treatment of Public Interest Drug or Medical Device Health
Care Organizations.--
``(1) 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 (c)(3) solely
because such organization, either directly or by contract,
manufactures or distributes drugs or medical devices in a
manner consistent with its designation under this subsection.
``(2) Eligibility for designation.--
``(A) In general.--The Secretary may designate an
organization that, either directly or by contract,
manufactures or distributes drugs or medical devices as
a public interest drug or medical device health care
organization under this subsection if the Secretary, in
consultation with the Secretary of Health and Human
Services, determines that--
``(i) the primary purpose of such
organization is making eligible drugs or
medical devices affordable,
``(ii) such organization is created or
organized in the United States and primarily
operated in the United States,
``(iii) such organization is not controlled
by a person which is not exempt from tax under
section 501(a), and
``(iv) such organization meets the
organizational requirements of subparagraph
(B).
``(B) Organizational requirements.--
``(i) In general.--An organization meets
the requirements of this subparagraph if--
``(I) 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 entity, and
``(II) no executive staff member of
the organization is also a board member
or executive staff member of a
disqualified entity.
``(ii) Applicable number.--For purposes of
subparagraph (B)(i), the applicable number is--
``(I) in the case of an
organization with less than 3 board
members, zero, and
``(II) in the case of any other
organization, 1.
``(iii) Exception for wholly owned
subsidiaries.--An organization shall not be
treated as failing to meet the requirements of
clause (i) with respect to any board member or
executive staff member of the organization if--
``(I) the disqualified entity is a
wholly owned subsidiary of the
organization, and
``(II) the board member or
executive staff member serves a similar
role with respect to such wholly owned
subsidiary.
``(iv) Exception if no business
transaction.--Clause (i)(II) shall not apply if
the organization and the disqualified entity
are prohibited from engaging in business
transactions with each other.
``(C) Disqualified entity.--For purposes of
subparagraph (B), the term `disqualified entity' means,
with respect to any organization described in
subparagraph (B)(i), any person which--
``(i) is in the trade or business of
manufacturing or distributing drugs or medical
devices, and
``(ii) is not exempt from tax under section
501(a).
``(3) Eligible drug or medical device.--
``(A) In general.--For purposes of this section,
the term `eligible drug or medical device' means any
drug or medical device if the Secretary (in
consultation with the Secretary of Health and Human
Services) determines that such drug or medical device--
``(i) meets the requirements of either
clause (i) or (ii) of subparagraph (B); and
``(ii) meets the requirements of at least
one other clause of such subparagraph.
``(B) Requirements.--The requirements of this
subparagraph with respect to any drug or medical device
are as follows:
``(i) The drug or medical device is in
shortage (as defined in, as applicable, section
506C(h) or section 506J(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 356c(h);
356j(j)), or, with respect to an over-the-
counter drug, as determined by the Secretary of
Health and Human Services), nationwide or in a
part of the United States (determined through
geographic area or population group), or is at
risk of such shortage.
``(ii) The manufacture or distribution of
the drug or medical device is expected to
significantly reduce--
``(I) the cost of such drug or
device for patients directly or
indirectly (which may be determined
through savings to the Medicare plan
under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.),
the Medicaid program under title XIX of
such Act (42 U.S.C. 1396 et seq.), or
within the health system), or
``(II) in the case of a novel drug
or device, reduce the costs compared to
current standard of care (which 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 uses).
``(iii) The manufacture or distribution of
the drug or medical device is expected to
address a currently unmet health need.
``(iv) The manufacture or distribution of
the drug is expected to address a public health
need identified by the Secretary (in
consultation with the Secretary of Health and
Human Services), or to address supply needs for
drugs and devices used during public health or
other national emergencies.
``(4) 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 following:
``(A) Evidence that the manufacturer or distributor
currently has, or has plans to develop, the ability to
manufacture or distribute a drug or medical device
which is an eligible drug or medical device.
``(B) An agreement that, 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
subsection, the manufacturer or distributor will give
the Secretary priority access to purchase such drug or
device, at a cost that is not more than the average
cost price offered to other purchasers, in a quantity
that is equivalent to at least 25 percent of the
manufacturer's production or the distributor's stock at
the time of the request for designation, until the need
identified by the Secretary has been met.
Nothing in an agreement under subparagraph (B) 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 (B).
``(5) Definitions.--For purposes of this section--
``(A) Drug.--The term `drug' means a drug approved
under section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) or licensed under section
351 of the Public Health Service Act (42 U.S.C. 252).
``(B) Medical device.--The term `medical device'
has the meaning given the term `device' in section
201(h) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 321(h)).
``(6) Regulations and guidance.--The Secretary (in
consultation with the Secretary of Health and Human Services)
shall issue such regulations or other guidance as is necessary
to carry out the purposes of this subsection, including
regulations or other guidance--
``(A) establishing affordability guidelines and
cost transparency requirements for purposes of
determining whether an organization meets the
requirements of paragraph (2)(A) with respect to any
eligible drug or medical device, including taking into
account the sustainability of operations, capital
expenditures, research and development, and maintenance
of reasonable reserves,
``(B) determining what constitutes an unmet health
need for purposes of paragraph (3)(B)(iii), and
``(C) for monitoring the continued compliance of
the requirements of this subsection for organizations
designated as public interest drug or medical device
health care organizations.''.
(b) Excess Benefits.--
(1) In general.--Section 4958(f)(1) of the Internal Revenue
Code of 1986 is amended by striking ``and'' at the end of
subparagraph (E), by striking the period at the end of
subparagraph (F) and inserting ``, and'', and by adding at the
end the following new subparagraph:
``(G) which involves public interest drug or
medical device health care organization (within the
meaning of section 501(s)), any person who provides
funding to such organization which is not permissible
funding.''.
(2) Permissible funding.--Section 4958(f) of such Code is
amended by adding at the end the following new paragraph:
``(9) Permissible funding.--For purposes of paragraph
(1)(G), the term `permissible funding' means funding from--
``(A) amounts which do not exceed 1 percent of the
gross receipts of such organization for the taxable
year of the organization in which such amount is
received,
``(B) amounts received pursuant to grants from or
contracts with any governmental entity or organization
which is exempt from tax under section 501(a), or
``(C) amounts provided in connection with the
purchase of drugs or medical devices (other than
purchases from any disqualified entity (as defined in
section 501(s)(2)(C))).''.
(c) 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 Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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