S. 3325: Expanding Access to Affordable Drugs and Medical Devices Act

The Expanding Access to Affordable Drugs and Medical Devices Act aims to amend the Internal Revenue Code to establish new tax-exempt status rules for organizations that manufacture and distribute drugs and medical devices intended to meet public health needs. Here’s a breakdown of the key provisions of the bill:

Designation of Organizations

The bill proposes the creation of a new category called "public interest drug or medical device health care organizations." These organizations can be designated as such by the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, if certain criteria are met, including:

• The primary purpose of the organization is to make eligible drugs or medical devices affordable.
• The organization operates primarily within the United States and is not controlled by a taxable entity.
• The organization meets specific organizational and operational requirements.

Eligibility Criteria

To qualify for this designation, organizations must demonstrate:

• Their drugs or medical devices are in short supply or at risk of becoming scarce.
• Their products are expected to significantly reduce prices for patients or meet unmet health needs.
• Their offerings address public health needs or supply requirements during national emergencies.

Benefit Access and Pricing

If designated as a public interest organization, these entities can maintain their tax-exempt status even when manufacturing or distributing goods. Organizations must submit a request for this designation, along with:

• Evidence of their capability to manufacture or distribute eligible drugs or devices.
• A commitment to give priority access of these products to the strategic national stockpile if needed, at competitive prices.

Definitions and Regulations

The bill provides definitions for what constitutes eligible drugs and medical devices and outlines how affordability will be determined. The Secretary will be responsible for establishing guidelines on:

• Affordability and cost transparency for the eligible products.
• Criteria for unmet health needs.
• Monitoring compliance with the designated requirements.

Excess Benefits

The legislation also amends rules surrounding excess benefits to prevent abuse of funding received by these public interest organizations. It introduces a definition for permissible funding, which must meet certain criteria to ensure that it does not compromise the organization’s public interest status.

Implementation Timeline

The changes outlined in the bill will take effect for taxable years beginning one year after the enactment date of the law.

Relevant Companies

• PFE (Pfizer Inc.): A major pharmaceutical company that could potentially qualify as a public interest organization under this bill if it develops affordable medications as per the criteria laid out.
• JNJ (Johnson & Johnson): This company produces a wide range of medical devices and drugs that may be eligible under the public interest designation if they meet the affordability and supply needs addressed in the bill.
• AMGN (Amgen Inc.): As a biotech company, they may see direct impact through their efforts to create affordable options for drugs that could qualify as public interest products.