Expanding Access to Affordable Drugs and Medical Devices Act
- Bill Number
- S. 3325
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2025-12-03: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-01-07T16:49:20Z
AI-Generated Summary
Purpose of the legislation This bill amends the Internal Revenue Code of 1986 to allow certain nonprofit organizations that manufacture or distribute drugs and medical devices to qualify for tax-exempt status under section 501(c)(3), provided they meet specific public health and affordability criteria.
Key provisions outlined
- Designation process: The Secretary of the Treasury, in consultation with the Secretary of Health and Human Services (HHS), may designate an organization as a "public interest drug or medical device health care organization" if its primary purpose is making eligible drugs or devices affordable, it is U.S.-based and operated, it is not controlled by taxable entities, and it satisfies board and executive independence rules.
- Organizational requirements: No more than one board member (or zero if the board has fewer than three members) and no executive staff may also serve in similar roles at a "disqualified entity" (a for-profit drug or device manufacturer or distributor), with limited exceptions for wholly owned subsidiaries or where no business transactions occur.
- Eligible drugs or devices: Must satisfy at least two of the following: be in shortage or at risk of shortage; expected to significantly reduce costs for patients or the health system (including Medicare and Medicaid); address an unmet health need; or meet a public health need or emergency supply requirement.
- Designation request requirements: Organizations must provide evidence of manufacturing or distribution capability and agree to give HHS priority access to purchase at least 25 percent of production or stock for the strategic national stockpile at average cost, without interfering with existing contracts.
- Excess benefits rules: Amends section 4958 to treat certain funding from disqualified entities as excess benefit transactions unless it qualifies as "permissible funding" (limited to 1 percent of gross receipts, government or tax-exempt grants/contracts, or device/drug purchases not from disqualified entities).
- Guidance and monitoring: Requires Treasury and HHS to issue regulations on affordability, cost transparency, unmet needs, and ongoing compliance.
Significant changes to existing law introduced
- Creates a new exception in section 501(s) allowing manufacturing and distribution activities by qualifying nonprofits without jeopardizing 501(c)(3) status.
- Introduces new restrictions on governance overlap with for-profit entities and on funding sources to prevent conflicts.
- Expands the definition of disqualified persons under the excess benefits tax rules to include certain funders of these organizations.
Potential impacts on government agencies, citizens, or international relations
- Government agencies: Increases administrative duties for the IRS (designations and compliance monitoring) and HHS (consultation on eligibility, shortages, and stockpile access).
- Citizens: May improve access to lower-cost drugs and devices during shortages or for unmet needs, potentially reducing out-of-pocket costs and burdens on Medicare/Medicaid.
- International relations: No direct effects identified in the bill.
Main stakeholders affected by this legislation
- Nonprofit organizations seeking to manufacture or distribute drugs and devices.
- For-profit pharmaceutical and medical device companies (as disqualified entities).
- Patients and health systems facing high costs or shortages.
- Federal agencies including the IRS, HHS, and programs such as Medicare and Medicaid.
- The strategic national stockpile program.
Notable legal, constitutional, or political implications
- Operates entirely within existing tax-exemption and public charity frameworks without altering constitutional standards for tax-exempt status.
- Requires ongoing regulatory oversight to maintain compliance, potentially creating new administrative processes between Treasury and HHS.
- Balances public health goals with safeguards against private inurement or control by taxable entities.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2025-12-03: Read twice and referred to the Committee on Finance.
- 2025-12-03: Introduced in Senate
Bill Versions
- Expanding Access to Affordable Drugs and Medical Devices Act — issued 2025-12-03 — PDF (11 pages)