Sec. 2. Clawback of research and development tax benefits for manufacturers engaging in pay-for-delay
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Section 41 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: If the Federal Trade Commission determines under section 27 of the Federal Trade Commission Act that the taxpayer violated section 5 of such Act in connection with the sale of a drug product (as defined in such section), then the tax under this chapter for the taxable year which includes the date of such determination shall be increased by the sum of the product for each of the 2 relevant years of— the aggregate decrease in the credits allowed under section 38 for such relevant year which would have resulted solely from reducing to zero any credit determined under this section, multiplied by the sales ratio for such drug product for such relevant year.
For purposes of this subsection, the term relevant year means, with respect to any determination by the Federal Trade Commission described in paragraph (1), a taxable year in which the aggregate decrease in the credits allowed under section 38 which would have resulted solely from reducing to zero any credit determined under this section is one of the two highest such decreases during the 10-year period ending with the last taxable year that ended before the date of such determination.
For purposes of this subsection, the term sales ratio means, with respect to a drug product sold by a taxpayer in a taxable year, the ratio of— the revenue from sales of such drug product by such taxpayer during such taxable year, to the total revenue from sales of all drug products by such taxpayer during such taxable year. If a taxpayer enters into a consent decree with respect to any proceeding initiated by the Federal Trade Commission under section 27 of the Federal Trade Commission Act, such consent decree shall be treated for purposes of this subsection as if the Commission had determined under such section that the taxpayer violated section 5 of such Act in connection with the sale of the drug product to which such proceeding relates.
The increase in tax under this subsection shall not be treated as a penalty for purposes of section 27(f) of the Federal Trade Commission Act. . The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act.