MMEDS Act of 2020

II 116TH CONGRESS 2D SESSION S. 4467 To rescue domestic medical product manufacturing activity by providing incen- tives in economically distressed areas of the United States and its posses- sions. IN THE SENATE OF THE UNITED STATES AUGUST 6, 2020 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Medical Manufac- 4 turing, Economic Development, and Sustainability Act of 5 2020’’ or the ‘‘MMEDS Act of 2020’’. 6 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4467 IS SEC. 2. ECONOMICALLY DISTRESSED ZONES. 1 (a) IN GENERAL.—Chapter 1 of the Internal Rev- 2 enue Code of 1986 is amended by adding at the end the 3 following new subchapter: 4 ‘‘Subchapter AA—Medical Product Manufac- 5 turing in Economically Distressed Zones 6 ‘‘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 7 ECONOMICALLY DISTRESSED ZONE CREDIT. 8 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al- 9 lowed as a credit against the tax imposed by subtitle A 10 for the taxable year an amount equal to 40 percent of the 11 sum of— 12 ‘‘(1) the aggregate amount of the taxpayer’s 13 medical product manufacturing economically dis- 14 tressed zone wages for such taxable year, 15 ‘‘(2) the allocable employee fringe benefit ex- 16 penses of the taxpayer for such taxable year, and 17 ‘‘(3) the depreciation and amortization allow- 18 ances of the taxpayer for the taxable year with re- 19 spect to qualified medical product manufacturing fa- 20 cility property. 21 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4467 IS ‘‘(b) DENIAL OF DOUBLE BENEFIT.—Any wages or 1 other expenses taken into account in determining the cred- 2 it under this section may not be taken into account in de- 3 termining the credit under sections 41, and any other pro- 4 vision determined by the Secretary to be substantially 5 similar. 6 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur- 7 poses of this section— 8 ‘‘(1) ECONOMICALLY DISTRESSED ZONE 9 WAGES.— 10 ‘‘(A) IN GENERAL.—The term ‘economi- 11 cally distressed zone wages’ means amounts 12 paid or incurred for wages during the taxable 13 year which are— 14 ‘‘(i) in connection with the active con- 15 duct of a trade or business of the taxpayer, 16 and 17 ‘‘(ii) paid or incurred for an employee 18 the principal place of employment of whom 19 is in a qualified medical product manufac- 20 turing facility of such taxpayer. 21 ‘‘(B) LIMITATION ON AMOUNT OF WAGES 22 TAKEN INTO ACCOUNT.— 23 ‘‘(i) IN GENERAL.—The amount of 24 wages which may be taken into account 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4467 IS under subparagraph (A) with respect to 1 any employee for any taxable year shall 2 not exceed the contribution and benefit 3 base determined under section 230 of the 4 Social Security Act for the calendar year 5 in which such taxable year begins. 6 ‘‘(ii) TREATMENT OF PART-TIME EM- 7 PLOYEES, ETC.—If— 8 ‘‘(I) any employee is not em- 9 ployed by the taxpayer on a substan- 10 tially full-time basis at all times dur- 11 ing the taxable year, or 12 ‘‘(II) the principal place of em- 13 ployment of any employee is not with- 14 in an economically distressed zone at 15 all times during the taxable year, 16 the limitation applicable under clause (i) 17 with respect to such employee shall be the 18 appropriate portion (as determined by the 19 Secretary) of the limitation which would 20 otherwise be in effect under clause (i). 21 ‘‘(C) TREATMENT OF CERTAIN EMPLOY- 22 EES.—The term ‘economically distressed zone 23 wages’ shall not include any wages paid to em- 24 ployees who are assigned by the employer to 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4467 IS perform services for another person, unless the 1 principal trade or business of the employer is to 2 make employees available for temporary periods 3 to other persons in return for compensation. 4 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT 5 EXPENSES.— 6 ‘‘(A) IN GENERAL.—The term ‘allocable 7 employee fringe benefit expenses’ means the ag- 8 gregate amount allowable as a deduction under 9 this chapter to the taxpayer for the taxable year 10 for the following amounts which are allocable to 11 employment in a qualified medical product 12 manufacturing facility: 13 ‘‘(i) Employer contributions under a 14 stock bonus, pension, profit-sharing, or an- 15 nuity plan. 16 ‘‘(ii) Employer-provided coverage 17 under any accident or health plan for em- 18 ployees. 19 ‘‘(iii) The cost of life or disability in- 20 surance provided to employees. 21 ‘‘(B) ALLOCATION.—For purposes of sub- 22 paragraph (A), an amount shall be treated as 23 allocable to a qualified medical product manu- 24 facturing facility only if such amount is with re- 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4467 IS spect to employment of an individual for serv- 1 ices provided, and the principal place of employ- 2 ment of whom is, in such facility. 3 ‘‘(3) QUALIFIED MEDICAL PRODUCT MANUFAC- 4 TURING FACILITY.—The term ‘qualified medical 5 product manufacturing facility’ means any facility 6 that— 7 ‘‘(A) researches and develops or produces 8 medical products or essential components of 9 medical products, and 10 ‘‘(B) is located within an economically dis- 11 tressed zone. 12 ‘‘(4) QUALIFIED MEDICAL PRODUCT MANUFAC- 13 TURING FACILITY PROPERTY.—The term ‘qualified 14 medical product manufacturing facility property’ 15 means any property used in (or consisting of) a 16 qualified medical product manufacturing facility if 17 such property is directly connected to the research, 18 development, or production of a medical product. 19 ‘‘(5) MEDICAL PRODUCT; ESSENTIAL COMPO- 20 NENT.— 21 ‘‘(A) MEDICAL PRODUCT.—The term ‘med- 22 ical product’ means— 23 ‘‘(i) a drug that— 24 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 4467 IS ‘‘(I) is a prescription drug sub- 1 ject to regulation under section 505 of 2 the Federal Food, Drug, and Cos- 3 metic Act (21 U.S.C. 355) or section 4 351 of the Public Health Service Act 5 (42 U.S.C. 262); 6 ‘‘(II) is subject to regulation 7 under section 802 of the Federal 8 Food, Drug, and Cosmetic Act (21 9 U.S.C. 382); or 10 ‘‘(III) is described in section 11 201(jj) of such Act (21 U.S.C. 12 321(jj)); or 13 ‘‘(ii) a device, as defined in section 14 201(h) of such Act (21 U.S.C. 321(h)). 15 ‘‘(B) ESSENTIAL COMPONENT.—The term 16 ‘essential component’ means, with respect to a 17 medical product— 18 ‘‘(i) an active pharmaceutical ingre- 19 dient; or 20 ‘‘(ii) a protein, antibody, enzyme, hor- 21 mone, or other organic material that is an 22 active ingredient in a biological product. 23 ‘‘(6) AGGREGATION RULES.— 24 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 4467 IS ‘‘(A) IN GENERAL.—For purposes of this 1 section, members of an affiliated group shall be 2 treated as a single taxpayer. 3 ‘‘(B) AFFILIATED GROUP.—The term ‘af- 4 filiated group’ means an affiliated group (as de- 5 fined in section 1504(a), determined without re- 6 gard to section 1504(b)(3)) one or more mem- 7 bers of which are engaged in the active conduct 8 of a trade or business within an economically 9 distressed zone. 10 ‘‘SEC. 1400AA–2. CREDIT FOR ECONOMICALLY DISTRESSED 11 ZONE PRODUCTS AND SERVICES ACQUIRED 12 BY DOMESTIC MEDICAL PRODUCT MANUFAC- 13 TURERS. 14 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli- 15 gible medical product manufacturer, there shall be allowed 16 as a credit against the tax imposed by subtitle A for the 17 taxable year an amount equal to the applicable percentage 18 of the aggregate amounts paid or incurred by the taxpayer 19 during such taxable year for qualified products or services. 20 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 21 this section, the term applicable percentage means— 22 ‘‘(1) 30 percent in the case of amounts paid or 23 incurred to persons not described in paragraph (2) 24 or (3), and 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 4467 IS ‘‘(2) 5 percent in the case of amounts paid or 1 incurred to a related person. 2 ‘‘(c) ELIGIBLE MEDICAL PRODUCT MANUFAC- 3 TURER.—For purposes of this section, the term ‘eligible 4 medical product manufacturer’ means any person in the 5 trade or business of producing medical products in the 6 United States. 7 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur- 8 poses of this section, the term ‘qualified product or service’ 9 means— 10 ‘‘(1) any product which is produced in an eco- 11 nomically distressed zone and which is integrated 12 into a medical product produced by the taxpayer, 13 and 14 ‘‘(2) any service which is provided in an eco- 15 nomically distressed zone and which is necessary to 16 the production of a medical product by the taxpayer 17 (including packaging). 18 ‘‘(e) RELATED PERSONS.—For purposes of this sec- 19 tion, persons shall be treated as related to each other if 20 such persons would be treated as a single employer under 21 the regulations prescribed under section 52(b). 22 ‘‘(f) OTHER TERMS.—Terms used in this section 23 which are also used in section 1400AA–1 shall have the 24 same meaning as when used in such section. 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 4467 IS ‘‘SEC. 1400AA–3. SPECIAL RULES TO SECURE THE NATIONAL 1 SUPPLY CHAIN. 2 ‘‘(a) IN GENERAL.—In the case of a qualified repatri- 3 ated pharmaceutical manufacturing facility, section 4 1400AA–1(a) shall be applied by substituting ‘60 percent’ 5 for ‘40 percent’. 6 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED- 7 IT FOR DEPRECIATION.—In the case of a taxpayer which 8 elects (at such time and in such manner as the Secretary 9 may provide) the application of this subsection with re- 10 spect to any qualified repatriated medical product manu- 11 facturing facility or qualified population health product 12 manufacturing facility— 13 ‘‘(1) section 1400AA–1(a)(3) shall not apply 14 with respect to any qualified medical product manu- 15 facturing facility property with respect to such facil- 16 ity, and 17 ‘‘(2) for purposes of section 168(k)— 18 ‘‘(A) such property shall be treated as 19 qualified property, and 20 ‘‘(B) the applicable percentage with respect 21 to such property shall be 100 percent. 22 ‘‘(c) QUALIFIED REPATRIATED MEDICAL PRODUCT 23 MANUFACTURING FACILITY.—For purposes of this sec- 24 tion, the term ‘qualified repatriated medical product man- 25 ufacturing facility’ means any qualified medical product 26 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 4467 IS manufacturing facility (as defined in section 1400AA–1) 1 the production of which was moved to an economically dis- 2 tressed zone from a foreign country that the United States 3 Trade Representative has determined could pose a risk to 4 the national supply chain because of political or social fac- 5 tors. 6 ‘‘SEC. 1400AA–4. DESIGNATION OF ECONOMICALLY DIS- 7 TRESSED ZONES. 8 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 9 the term ‘economically distressed zone’ means any popu- 10 lation census tract within the United States which— 11 ‘‘(1) has a poverty rate of not less than 35 per- 12 cent for each of the 5 most recent calendar years for 13 which information is available, or 14 ‘‘(2) satisfies each of the following require- 15 ments: 16 ‘‘(A) The census tract has pervasive pov- 17 erty, unemployment, low labor force participa- 18 tion, and general distress measured as a pro- 19 longed period of economic decline measured by 20 real gross national product. 21 ‘‘(B) The census tract has a poverty rate 22 of not less than 30 percent for each of the 5 23 most recent calendar years for which informa- 24 tion is available. 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 4467 IS ‘‘(C) The census tract has been designated 1 as such by the Secretary and the Secretary of 2 Commerce pursuant to an application under 3 subsection (b). 4 ‘‘(b) APPLICATION FOR DESIGNATION.— 5 ‘‘(1) IN GENERAL.—An application for designa- 6 tion as an economically distressed zone may be filed 7 by a State or local government in which the popu- 8 lation census tract to which the application applies 9 is located. 10 ‘‘(2) REQUIREMENTS.—Such application shall 11 include a strategic plan for accomplishing the pur- 12 poses of this subchapter, which— 13 ‘‘(A) describes the coordinated economic, 14 human, community, and physical development 15 plan and related activities proposed for the 16 nominated area, 17 ‘‘(B) describes the process by which the af- 18 fected community is a full partner in the proc- 19 ess of developing and implementing the plan 20 and the extent to which local institutions and 21 organizations have contributed to the planning 22 process, 23 ‘‘(C) identifies the amount of State, local, 24 and private resources that will be available in 25 VerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 4467 IS the nominated area and the p [Text truncated for display. 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