[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 33 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 33
To rescue domestic medical product manufacturing activity by providing
incentives in economically distressed areas of the United States and
its possessions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 24 (legislative day, January 3), 2023
Mr. Rubio introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To rescue domestic medical product manufacturing activity by providing
incentives in economically distressed areas of the United States and
its possessions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medical Manufacturing, Economic
Development, and Sustainability Act of 2023'' or the ``MMEDS Act of
2023''.
SEC. 2. ECONOMICALLY DISTRESSED ZONES.
(a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subchapter:
``Subchapter AA--Medical Product Manufacturing in Economically
Distressed Zones
``subchapter aa--medical product manufacturing in economically
distressed zones
``Sec. 1400AA-1. Medical product manufacturing in economically
distressed zone credit.
``Sec. 1400AA-2. Credit for economically distressed zone products and
services acquired by domestic medical
product manufacturers.
``Sec. 1400AA-3. Special rules to secure the national supply chain.
``Sec. 1400AA-4. Designation of economically distressed zones.
``SEC. 1400AA-1. MEDICAL PRODUCT MANUFACTURING IN ECONOMICALLY
DISTRESSED ZONE CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by subtitle A for the taxable year an amount
equal to 40 percent of the sum of--
``(1) the aggregate amount of the taxpayer's medical
product manufacturing economically distressed zone wages for
such taxable year,
``(2) the allocable employee fringe benefit expenses of the
taxpayer for such taxable year, and
``(3) the depreciation and amortization allowances of the
taxpayer for the taxable year with respect to qualified medical
product manufacturing facility property.
``(b) Denial of Double Benefit.--Any wages or other expenses taken
into account in determining the credit under this section may not be
taken into account in determining the credit under sections 41, and any
other provision determined by the Secretary to be substantially
similar.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Economically distressed zone wages.--
``(A) In general.--The term `economically
distressed zone wages' means amounts paid or incurred
for wages during the taxable year which are--
``(i) in connection with the active conduct
of a trade or business of the taxpayer, and
``(ii) paid or incurred for an employee the
principal place of employment of whom is in a
qualified medical product manufacturing
facility of such taxpayer.
``(B) Limitation on amount of wages taken into
account.--
``(i) In general.--The amount of wages
which may be taken into account under
subparagraph (A) with respect to any employee
for any taxable year shall not exceed the
contribution and benefit base determined under
section 230 of the Social Security Act for the
calendar year in which such taxable year
begins.
``(ii) Treatment of part-time employees,
etc.--If--
``(I) any employee is not employed
by the taxpayer on a substantially
full-time basis at all times during the
taxable year, or
``(II) the principal place of
employment of any employee is not
within an economically distressed zone
at all times during the taxable year,
the limitation applicable under clause (i) with
respect to such employee shall be the
appropriate portion (as determined by the
Secretary) of the limitation which would
otherwise be in effect under clause (i).
``(C) Treatment of certain employees.--The term
`economically distressed zone wages' shall not include
any wages paid to employees who are assigned by the
employer to perform services for another person, unless
the principal trade or business of the employer is to
make employees available for temporary periods to other
persons in return for compensation.
``(D) Wages.--For purposes of this paragraph, the
term `wages' shall not include any amounts which are
allocable employee fringe benefit expenses.
``(2) Allocable employee fringe benefit expenses.--
``(A) In general.--The term `allocable employee
fringe benefit expenses' means the aggregate amount
allowable as a deduction under this chapter to the
taxpayer for the taxable year for the following amounts
which are allocable to employment in a qualified
medical product manufacturing facility:
``(i) Employer contributions under a stock
bonus, pension, profit-sharing, or annuity
plan.
``(ii) Employer-provided coverage under any
accident or health plan for employees.
``(iii) The cost of life or disability
insurance provided to employees.
``(B) Allocation.--For purposes of subparagraph
(A), an amount shall be treated as allocable to a
qualified medical product manufacturing facility only
if such amount is with respect to employment of an
individual for services provided, and the principal
place of employment of whom is, in such facility.
``(3) Qualified medical product manufacturing facility.--
The term `qualified medical product manufacturing facility'
means any facility that--
``(A) researches and develops or produces medical
products or essential components of medical products,
and
``(B) is located within an economically distressed
zone.
``(4) Qualified medical product manufacturing facility
property.--The term `qualified medical product manufacturing
facility property' means any property originally used in (or
consisting of) a qualified medical product manufacturing
facility if such property is directly connected to the
research, development, or production of a medical product.
``(5) Medical product; essential component.--
``(A) Medical product.--The term `medical product'
means--
``(i) a drug that--
``(I) is a prescription drug
subject to regulation under section 505
of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355) or section 351 of
the Public Health Service Act (42
U.S.C. 262),
``(II) is subject to regulation
under section 802 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 382),
or
``(III) is described in section
201(jj) of such Act (21 U.S.C.
321(jj)), or
``(ii) a device, as defined in section
201(h) of such Act (21 U.S.C. 321(h)).
``(B) Essential component.--The term `essential
component' means, with respect to a medical product--
``(i) an active pharmaceutical ingredient,
or
``(ii) a protein, antibody, enzyme,
hormone, or other organic material that is an
active ingredient in a biological product.
``(6) Aggregation rules.--
``(A) In general.--For purposes of this section,
members of an affiliated group shall be treated as a
single taxpayer.
``(B) Affiliated group.--The term `affiliated
group' means an affiliated group (as defined in section
1504(a), determined without regard to section
1504(b)(3)) one or more members of which are engaged in
the active conduct of a trade or business within an
economically distressed zone.
``SEC. 1400AA-2. CREDIT FOR ECONOMICALLY DISTRESSED ZONE PRODUCTS AND
SERVICES ACQUIRED BY DOMESTIC MEDICAL PRODUCT
MANUFACTURERS.
``(a) Allowance of Credit.--In the case of an eligible medical
product manufacturer, there shall be allowed as a credit against the
tax imposed by subtitle A for the taxable year an amount equal to the
applicable percentage of the aggregate amounts paid or incurred by the
taxpayer during such taxable year for qualified products or services.
``(b) Applicable Percentage.--For purposes of this section, the
term applicable percentage means--
``(1) 30 percent in the case of amounts paid or incurred to
persons not described in paragraph (2) or (3), and
``(2) 5 percent in the case of amounts paid or incurred to
a related person.
``(c) Eligible Medical Product Manufacturer.--For purposes of this
section, the term `eligible medical product manufacturer' means any
person in the trade or business of producing medical products in the
United States.
``(d) Qualified Product or Service.--For purposes of this section,
the term `qualified product or service' means--
``(1) any product which is produced in an economically
distressed zone and which is integrated into a medical product
produced by the taxpayer, and
``(2) any service which is provided in an economically
distressed zone and which is necessary to the production of a
medical product by the taxpayer (including packaging).
``(e) Related Persons.--For purposes of this section, persons shall
be treated as related to each other if such persons would be treated as
a single employer under the regulations prescribed under section 52(b).
``(f) Other Terms.--Terms used in this section which are also used
in section 1400AA-1 shall have the same meaning as when used in such
section.
``SEC. 1400AA-3. SPECIAL RULES TO SECURE THE NATIONAL SUPPLY CHAIN.
``(a) In General.--In the case of a qualified repatriated
pharmaceutical manufacturing facility, section 1400AA-1(a) shall be
applied by substituting `60 percent' for `40 percent'.
``(b) Election To Expense in Lieu of Tax Credit for Depreciation.--
In the case of a taxpayer which elects (at such time and in such manner
as the Secretary may provide) the application of this subsection with
respect to any qualified repatriated medical product manufacturing
facility or qualified population health product manufacturing
facility--
``(1) section 1400AA-1(a)(3) shall not apply with respect
to any qualified medical product manufacturing facility
property with respect to such facility, and
``(2) for purposes of section 168(k)--
``(A) such property shall be treated as qualified
property, and
``(B) the applicable percentage with respect to
such property shall be 100 percent.
``(c) Qualified Repatriated Medical Product Manufacturing
Facility.--For purposes of this section, the term `qualified
repatriated medical product manufacturing facility' means any qualified
medical product manufacturing facility (as defined in section 1400AA-1)
the production of which was moved to an economically distressed zone
from a foreign country that the United States Trade Representative has
determined could pose a risk to the national supply chain because of
political or social factors.
``SEC. 1400AA-4. DESIGNATION OF ECONOMICALLY DISTRESSED ZONES.
``(a) In General.--For purposes of this subchapter, the term
`economically distressed zone' means any population census tract within
the United States which--
``(1) has a poverty rate of not less than 35 percent for
each of the 5 most recent calendar years for which information
is available, or
``(2) satisfies each of the following requirements:
``(A) The census tract has pervasive poverty,
unemployment, low labor force participation, and
general distress measured as a prolonged period of
economic decline measured by real gross national
product.
``(B) The census tract has a poverty rate of not
less than 30 percent for each of the 5 most recent
calendar years for which information is available.
``(C) The census tract has been designated as such
by the Secretary and the Secretary of Commerce pursuant
to an application under subsection (b).
``(b) Application for Designation.--
``(1) In general.--An application for designation as an
economically distressed zone may be filed by a State or local
government in which the population census tract to which the
application applies is located.
``(2) Requirements.--Such application shall include a
strategic plan for accomplishing the purposes of this
subchapter, which--
``(A) describes the coordinated economic, human,
community, and physical development plan and related
activities proposed for the nominated area,
``(B) describes the process by which the affected
community is a full partner in the process of
developing and implementing the plan and the extent to
which local institutions and organizations have
contributed to the planning process,
``(C) identifies the amount of State, local, and
private resources that will be available in the
nominated area and the private/public partnerships to
be used, which may include participation by, and
cooperation with, universities, medical centers, and
other private and public entities,
``(D) identifies the funding requested under any
Federal program in support of the proposed economic,
human, community, and physical development and related
activities,
``(E) identifies baselines, methods, and benchmarks
for measuring the success of carrying out the strategic
plan, including the extent to which poor persons and
families will be empowered to become economically self-
sufficient, and
``(F) does not include any action to assist any
establishment in relocating from one area outside the
nominated area to the nominated area, except that
assistance for the expansion of an existing business
entity through the establishment of a new branch,
affiliate, or subsidiary is permitted if--
``(i) the establishment of the new branch,
affiliate, or subsidiary will not result in a
decrease in employment in the area of original
location or in any other area where the
existing business entity conducts business
operations,
``(ii) there is no reason to believe that
the new branch, affiliate, or subsidiary is
being established with the intention of closing
down the operations of the existing business
entity in the area of its original location or
in any other area where the existing business
entity conducts business operation, and
``(iii) includes such other information as
may be required by the Secretary and the
Secretary of Commerce.
``(c) Period for Which Designations Are in Effect.--Designation as
an economically distressed zone may be made at any time during the 10-
year period beginning on the date of the enactment of this section, and
shall remain in effect with respect to such zone during the 15-year
period beginning on the date of such designation. Economically
distressed zones described in subsection (a)(1) shall take effect on
the date of the enactment of this Act and shall remain in effect during
the 15-year period beginning on such date.
``(d) Territories and Possessions.--The term `United States'
includes the 50 States, the District of Columbia, and the territories
and possessions of the United States.
``(e) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including--
``(1) not later than 30 days after the date of the
enactment of this section, a list of the population census
tracts described in subsection (a)(1), and
``(2) not later than 60 days after the date of the
enactment of this section, regulations or other guidance
regarding the designation of population census tracts described
in subsection (a)(2).''.
(b) Clerical Amendment.--The table of subchapters for chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the end the
following new item:
``subchapter aa--medical product manufacturing in economically
distressed zones''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 3. REPORT ON NEED FOR INCENTIVIZING DEVELOPMENT OF THERAPIES.
Not later than 90 days after the date of enactment of this Act, the
Secretary of Health and Human Services shall examine and report to the
Congress on--
(1) the extent to which the health of aging individuals in
the United States, African Americans, Hispanics, Native
Americans, veterans, or other vulnerable populations in the
United States has been disproportionately harmed by the COVID-
19 pandemic and prior epidemics and pandemics;
(2) the therapies currently available, and whether there is
a need for additional innovation and development to produce
therapies, to reduce the exposure of vulnerable populations in
the United States to risk of disproportionate harm in epidemics
and pandemics; and
(3) whether the Secretary recommends providing the same
incentives for the development and marketing of therapies
described in paragraph (2) as is provided under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) with
respect to qualified infectious disease products designated
under section 505E(d) of such Act (21 U.S.C. 355f(d)).
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