Medical Manufacturing, Economic Development, and Sustainability Act of 2023 or the MMEDS Act of 2023
This bill provides incentives for relocating medical manufacturing facilities in the United States and for manufacturing medical products (i.e., drugs and devices) in economically distressed zones. Specifically, the bill allows a income tax credit for 40% of the sum of wages paid in a medical manufacturing economically distressed zone, employee fringe benefit expenses, and depreciation and amortization allowances with respect to qualified medical manufacturing facility property, and a credit for economically distressed zone products and services acquired by domestic medical manufacturers. The bill increases the credit rate for minority businesses.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 447 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 447
To rescue domestic medical manufacturing activity by providing
incentives in economically distressed areas of the United States and
its possessions.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 24, 2023
Mrs. Gonzalez-Colon (for herself and Ms. Salazar) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Energy and Commerce, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To rescue domestic medical 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 Manufacturing in Economically Distressed Zones
``subchapter aa--medical manufacturing in economically distressed zones
``Sec. 1400AA-1. Medical manufacturing in economically distressed zone
credit.
``Sec. 1400AA-2. Credit for economically distressed zone products and
services acquired by domestic medical
manufacturers.
``Sec. 1400AA-3. Special rules to secure the national supply chain and
for the production of population health
products.
``Sec. 1400AA-4. Designation of economically distressed zones.
``SEC. 1400AA-1. MEDICAL 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 40 percent of the sum of--
``(1) the aggregate amount of the taxpayer's medical
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
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 of an employee by the taxpayer for 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 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 manufacturing facility and which are not
included as economically distressed zone wages pursuant
to this subsection:
``(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 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 manufacturing facility.--The term
`qualified medical 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 manufacturing facility property.--
The term `qualified medical manufacturing facility property'
means any property used in (or consisting of) a qualified
medical 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 MANUFACTURERS.
``(a) Allowance of Credit.--In the case of an eligible medical
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 economically distressed
zone 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),
``(2) 40 percent in the case of amounts paid or incurred to
an unrelated minority business, and
``(3) 5 percent in the case of amounts paid or incurred to
a related person.
``(c) Eligible Medical Manufacturer.--For purposes of this section,
the term `eligible medical 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) Minority Business.--For purposes of this section--
``(1) In general.--The term `minority business' means--
``(A) a sole proprietorship carried on by a
qualified individual, or
``(B) a corporation or partnership--
``(i) at least 50 percent of the ownership
interests in which are held by one or more
qualified individuals, and
``(ii) of which a qualified individual is
the president or chief executive officer (or a
substantially equivalent position).
``(2) Qualified individual.--The term `qualified
individual' means any individual who--
``(A) is of Asian-Indian, Asian-Pacific, Black,
Hispanic, or Native American origin or descent, and
``(B) is a United States citizen or legal resident
of the United States or any of its territories or
possessions.
``(f) 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).
``(g) 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 AND
FOR THE PRODUCTION OF POPULATION HEALTH PRODUCTS.
``(a) In General.--In the case of a qualified repatriated medical
manufacturing facility or a qualified population health product
manufacturing facility--
``(1) section 1400AA-1(a) shall be applied by substituting
`60 percent' for `40 percent', and
``(2) section 1400AA-2(a) shall be applied--
``(A) by substituting `50 percent' for `30
percent', and
``(B) 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 manufacturing facility or
qualified population health product manufacturing facility--
``(1) section 1400AA-1(a)(3) shall not apply with respect
to any qualified medical 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 Manufacturing Facility.--For
purposes of this section, the term `qualified repatriated medical
manufacturing facility' means any qualified medical 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.
``(d) Qualified Population Health Product Manufacturing Facility.--
For purposes of this section, the term `qualified population health
product manufacturing facility' means any qualified medical
manufacturing facility (as defined in section 1400AA-1) that produces a
population health product (as defined in section 319L(a)(11) of the
Public Health Service Act) which the Secretary of Health and Human
Services has identified for support through a strategic initiative
under section 319L(c)(4)(F)(ii) of the Public Health Service Act.
``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) 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) has a poverty rate of not less than 30
percent for each of the 5 most recent calendar years
for which information is available, and
``(C) 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) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 3. AUTHORITY TO SUPPORT DEVELOPMENT OF POPULATION HEALTH PRODUCTS.
(a) Definitions.--
(1) Qualified countermeasure.--Subparagraph (A) of section
319F-1(a)(2) of the Public Health Service Act (42 U.S.C. 247d-
6a(a)(2)) is amended to read as follows:
``(A) Qualified countermeasure.--The term
`qualified countermeasure' means a drug (as that term
is defined by section 201(g)(1) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 321(g)(1))),
biological product (as that term is defined by section
351(i) of this Act (42 U.S.C. 262(i))), or device (as
that term is defined by section 201(h) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321(h))), that
the Secretary determines to be a priority consistent
with sections 302(2) and 304(a) of the Homeland
Security Act of 2002--
``(i) to diagnose, mitigate, prevent, or
treat harm from any biological agent (including
organisms that cause an infectious disease),
toxin, chemical, radiological, or nuclear agent
that may cause a public health emergency
affecting national security; or
``(ii) to diagnose, mitigate, prevent, or
treat harm from an underlying non-communicable
disease which, combined with pandemic influenza
or an emerging infectious disease, may result
in adverse health consequences or serious
threat to one or more vulnerable American
populations (as defined in section 319L(a)) in
an epidemic or pandemic.''.
(2) Other definitions.--Subsection (a) of section 319L of
the Public Health Service Act (42 U.S.C. 247d-7e) is amended by
adding at the end the following new paragraphs:
``(11) Population health product.--The term `population
health product' means a widely available drug to diagnose,
mitigate, prevent, or treat harm from an underlying non-
communicable disease which, combined with pandemic influenza or
an emerging infectious disease, may result in adverse health
consequences or a serious threat to one or more vulnerable
American populations in an epidemic or pandemic.
``(12) Vulnerable american populations.--The term
`vulnerable American populations' means children, pregnant
women, older adults, minority populations, and other at-risk
individuals with relevant characteristics that warrant
consideration during the process of researching and developing
such countermeasures and products.''.
(b) Strategic Initiatives.--Clause (ii) of section 319L(c)(4)(F) of
the Public Health Service Act (42 U.S.C. 247d-7e(c)(4)(F)) is amended
to read as follows:
``(ii) threats that consistently exist or
continually circulate and have a significant
potential to become a pandemic, such as
pandemic influenza and emerging infectious
diseases in combination with underlying non-
communicable diseases, which may include the
advanced research and development,
manufacturing, and appropriate stockpiling of
qualified pandemic or epidemic products, and
products, technologies, or processes to support
the advanced research and development of such
countermeasures (including multiuse platform
technologies for diagnostics, vaccines, and
therapeutics; virus seeds; clinical trial lots;
novel virus strains; and antigen and adjuvant
material); and''.
(c) At-Risk Individuals.--Paragraph (6) of section 319L(c) of the
Public Health Service Act (42 U.S.C. 247d-7e(c)) is amended to read as
follows:
``(6) At-risk individuals.--In carrying out the functions
under this section, the Secretary may give a priority to
advanced research and development of--
``(A) qualified countermeasures and qualified
pandemic or epidemic products likely to be safe and
effective with respect to vulnerable American
populations; and
``(B) population health products likely to protect
vulnerable American populations with underlying non-
communicable diseases from disproportionate harm in
epidemics and pandemics.''.
(d) Other Authorities.--Section 319L(c) of the Public Health
Service Act (42 U.S.C. 247d-7e(c)) is amended by adding at the end the
following:
``(8) Timely delivery of population health products to at-
risk individuals.--The Secretary shall collaborate with the
Administrator of the Centers for Medicare & Medicaid Services,
the Secretary of Defense, the Secretary of Veterans Affairs,
the Commissioner of Food and Drugs, and the heads of other
Federal agencies involved with approval and distribution of
health products to assure that such Federal agencies distribute
approved population health products as promptly and effectively
as possible, and as continuously as possible, to protect
vulnerable American populations from harm in epidemics and
pandemics.
``(9) Report on need for incentivizing development of
population health products.--Not later than 90 days after the
date of enactment of the Medical Manufacturing, Economic
Development, and Sustainability Act of 2023, the Secretary
shall examine and report to the Congress on--
``(A) the extent to which the health of aging
Americans, African Americans, Hispanics, Native
Americans, veterans, or other vulnerable American
populations has been disproportionately harmed by the
COVID-19 pandemic and prior epidemics and pandemics;
``(B) the population health products currently
available and whether there is a need for additional
innovation and development to produce population health
products to reduce the exposure of vulnerable American
populations to risk of disproportionate harm in
epidemics and pandemics; and
``(C) whether the Secretary recommends providing
the same incentives for the development and marketing
of population health products as is given with respect
to covered infectious disease products under the
Federal Food, Drug, and Cosmetic Act, including under
section 505E of such Act.''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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