Number: RL31511
Title: Federal Taxation of the Pharmaceutical Industry: Effects on New Drug Development and Legislative Initiatives in the 109th Congress
Authors: Gary Guenther, Government and Finance Division 
Abstract: This report examines a small slice of the federal policies influencing pharmaceutical innovation: the federal tax burden on the pharmaceutical industry. The federal tax code affects private investment in new drug discovery and development in a variety of ways, and these linkages form the core of the report. More specifically, it analyses the industry's federal tax burden from 1995 to 2001 - the most recent year for which federal corporate tax return data are available - focusing on the provisions in the federal tax code that appear to generate significant tax benefits or penalties for pharmaceutical firms that invest heavily in R&D. The size of the industry's tax burden influences its capacity to invest in innovation. The report begins with an examination of the distinguishing traits of the pharmaceutical industry directly related to its tax treatment and concludes with a description of legislative proposals to modify some aspect of this treatment in the 109th Congress.
Pages: 23
Date: June 1, 2005