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R&D, ORPHAN DRUG TAX CREDIT EXTENSIONS TO SEPT. 30, 1993 ADDED TO SENATE TAX BILL AS PART OF SEN. BENTSEN’s SMALL-GROUP HEALTH FINANCING REFORM AMENDMENT

Executive Summary

Tax credits for increased corporate R&D spending and orphan drug clinical testing costs would be extended to Sept. 30, 1993 under provisions of an amendment the Senate added Sept. 23 to a $31 bil. tax and urban aid package (HR 11). The credits -- which repeatedly have been extended "temporarily" over the past several years and which industry has urged be made permanent -- expired on June 30, 1992. Reflecting the Senate's effort to clear the slate of pending legislation before its early October adjournment, the credits were included in an amendment offered by Sens. Bentsen (D-Tex.), Durenberger (R-Minn.) and Chafee (R-R.I.) that focuses on reforming insurance practices to enable small companies and other small groups to purchase health care coverage. The core of the amendment is drawn from Bentsen and Durenberger's earlier legislation, HR 1872, which was endorsed by the Pharmaceutical Manufacturers Association ("The Pink Sheet" March 9, p. 13). The Bentsen/Durenberger/Chafee amendment contains few provisions directly targeting pharmaceuticals; for example, it does not address insurance coverage of outpatient drugs. One provision that would likely encompass pharmaceuticals is the establishment of an 11-member "Health Care Cost Commission" that would report annually on health care costs, insurance trends and cost containment. The amendment would require Medicare to conduct demonstration projects on the feasibility of covering certain preventive services. These are defined as including influenza vaccinations, cholesterol screening and cholesterol-lowering drugs and osteoporosis screening and treatment, including hormone therapy. The Senate was expected to vote on HR 11 Sept. 26 but the small-group reform provisions may run into House opposition. Speaker Foley (D-Mass.) said at a Sept. 24 press conference he believes there is not sufficient time remaining this session for the House to consider specifically such a substantive proposal, although he did not rule out the possibility that House conferees might go along with the bill.
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