Federal

MMEDS Act of 2023

Source: Congress.gov · 3,437 words in original text

What This Bill Does

This bill creates tax incentives (financial rewards from the government) to encourage medical product manufacturing in economically distressed areas (poor neighborhoods) in the United States and its possessions. The bill offers tax credits (reductions in taxes owed) to companies that make medical products in these struggling areas and to companies that buy products and services from these zones.

Who It Affects

• Companies that manufacture medical products in the United States • Employees working at medical product manufacturing facilities in economically distressed areas • State and local governments that apply to designate areas as economically distressed zones • The Secretary of Health and Human Services • The Secretary of Commerce • The Secretary of the Treasury

Key Provisions

• Companies get a 40 percent tax credit for wages paid to workers at qualifying medical product facilities in economically distressed zones, fringe benefits (employer-paid health insurance and retirement contributions), and depreciation costs (yearly reduction in property value) (Sec. 1400AA-1) • Medical product makers get a 30 percent tax credit when they buy products or services from economically distressed zones that go into their medical products, or 5 percent if they buy from a related company (Sec. 1400AA-2) • Companies moving pharmaceutical manufacturing from foreign countries to economically distressed zones get a 60 percent tax credit instead of 40 percent (Sec. 1400AA-3) • Areas qualify as economically distressed zones if they have a poverty rate of at least 35 percent for five recent years, or at least 30 percent poverty plus evidence of long economic decline, and are officially designated (Sec. 1400AA-4) • The Secretary of Health and Human Services must report within 90 days on whether vulnerable populations were harmed by COVID-19 and prior epidemics and whether new therapies are needed (Sec. 3)

What Changes

If enacted, companies manufacturing medical products in economically distressed zones would pay less in federal taxes. Companies buying supplies and services from these areas would also receive tax credits. State and local governments could apply to have their areas officially designated as economically distressed zones to receive these benefits. The Secretary of Health and Human Services must examine and report on pandemic impacts on vulnerable populations and therapy development needs.

Important Definitions

• "Economically distressed zone": A neighborhood census area with persistent poverty (at least 35 percent poverty rate for five recent years, or 30 percent poverty plus long-term economic decline) officially designated by the Secretary of the Treasury and Secretary of Commerce • "Medical product": A prescription drug regulated by the Food and Drug Administration or a biological product, or a device regulated by the FDA • "Essential component": An active pharmaceutical ingredient (chemical compound that creates the drug's effect) or a protein, antibody, enzyme, or hormone that is an active ingredient in a biological product • "Qualified medical product manufacturing facility": Any facility that researches, develops, or produces medical products or their essential components and is located in an economically distressed zone • "Economically distressed zone wages": Pay given to workers employed full-time at a qualifying medical product facility in an economically distressed zone, capped at the Social Security wage base (maximum amount subject to Social Security tax) for that year

Effective Date

The tax credit provisions apply to taxable years beginning after December 31, 2022. Economically distressed zones with a 35 percent poverty rate take effect on the date the law is enacted. The Secretary of the Treasury must issue a list of these zones within 30 days of enactment and regulations for other zones within 60 days.

II 118TH CONGRESS 1ST SESSION S. 33 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 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 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 2023’’ or the ‘‘MMEDS Act of 2023’’. 6 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 2 •S 33 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 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 3 •S 33 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 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 4 •S 33 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 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 5 •S 33 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 ‘‘(D) WAGES.—For purposes of this para- 5 graph, the term ‘wages’ shall not include any 6 amounts which are allocable employee fringe 7 benefit expenses. 8 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT 9 EXPENSES.— 10 ‘‘(A) IN GENERAL.—The term ‘allocable 11 employee fringe benefit expenses’ means the ag- 12 gregate amount allowable as a deduction under 13 this chapter to the taxpayer for the taxable year 14 for the following amounts which are allocable to 15 employment in a qualified medical product 16 manufacturing facility: 17 ‘‘(i) Employer contributions under a 18 stock bonus, pension, profit-sharing, or an- 19 nuity plan. 20 ‘‘(ii) Employer-provided coverage 21 under any accident or health plan for em- 22 ployees. 23 ‘‘(iii) The cost of life or disability in- 24 surance provided to employees. 25 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 6 •S 33 IS ‘‘(B) ALLOCATION.—For purposes of sub- 1 paragraph (A), an amount shall be treated as 2 allocable to a qualified medical product manu- 3 facturing facility only if such amount is with re- 4 spect to employment of an individual for serv- 5 ices provided, and the principal place of employ- 6 ment of whom is, in such facility. 7 ‘‘(3) QUALIFIED MEDICAL PRODUCT MANUFAC- 8 TURING FACILITY.—The term ‘qualified medical 9 product manufacturing facility’ means any facility 10 that— 11 ‘‘(A) researches and develops or produces 12 medical products or essential components of 13 medical products, and 14 ‘‘(B) is located within an economically dis- 15 tressed zone. 16 ‘‘(4) QUALIFIED MEDICAL PRODUCT MANUFAC- 17 TURING FACILITY PROPERTY.—The term ‘qualified 18 medical product manufacturing facility property’ 19 means any property originally used in (or consisting 20 of) a qualified medical product manufacturing facil- 21 ity if such property is directly connected to the re- 22 search, development, or production of a medical 23 product. 24 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 7 •S 33 IS ‘‘(5) MEDICAL PRODUCT; ESSENTIAL COMPO- 1 NENT.— 2 ‘‘(A) MEDICAL PRODUCT.—The term ‘med- 3 ical product’ means— 4 ‘‘(i) a drug that— 5 ‘‘(I) is a prescription drug sub- 6 ject to regulation under section 505 of 7 the Federal Food, Drug, and Cos- 8 metic Act (21 U.S.C. 355) or section 9 351 of the Public Health Service Act 10 (42 U.S.C. 262), 11 ‘‘(II) is subject to regulation 12 under section 802 of the Federal 13 Food, Drug, and Cosmetic Act (21 14 U.S.C. 382), or 15 ‘‘(III) is described in section 16 201(jj) of such Act (21 U.S.C. 17 321(jj)), or 18 ‘‘(ii) a device, as defined in section 19 201(h) of such Act (21 U.S.C. 321(h)). 20 ‘‘(B) ESSENTIAL COMPONENT.—The term 21 ‘essential component’ means, with respect to a 22 medical product— 23 ‘‘(i) an active pharmaceutical ingre- 24 dient, or 25 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 8 •S 33 IS ‘‘(ii) a protein, antibody, enzyme, hor- 1 mone, or other organic material that is an 2 active ingredient in a biological product. 3 ‘‘(6) AGGREGATION RULES.— 4 ‘‘(A) IN GENERAL.—For purposes of this 5 section, members of an affiliated group shall be 6 treated as a single taxpayer. 7 ‘‘(B) AFFILIATED GROUP.—The term ‘af- 8 filiated group’ means an affiliated group (as de- 9 fined in section 1504(a), determined without re- 10 gard to section 1504(b)(3)) one or more mem- 11 bers of which are engaged in the active conduct 12 of a trade or business within an economically 13 distressed zone. 14 ‘‘SEC. 1400AA–2. CREDIT FOR ECONOMICALLY DISTRESSED 15 ZONE PRODUCTS AND SERVICES ACQUIRED 16 BY DOMESTIC MEDICAL PRODUCT MANUFAC- 17 TURERS. 18 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli- 19 gible medical product manufacturer, there shall be allowed 20 as a credit against the tax imposed by subtitle A for the 21 taxable year an amount equal to the applicable percentage 22 of the aggregate amounts paid or incurred by the taxpayer 23 during such taxable year for qualified products or services. 24 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 9 •S 33 IS ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 1 this section, the term applicable percentage means— 2 ‘‘(1) 30 percent in the case of amounts paid or 3 incurred to persons not described in paragraph (2) 4 or (3), and 5 ‘‘(2) 5 percent in the case of amounts paid or 6 incurred to a related person. 7 ‘‘(c) ELIGIBLE MEDICAL PRODUCT MANUFAC- 8 TURER.—For purposes of this section, the term ‘eligible 9 medical product manufacturer’ means any person in the 10 trade or business of producing medical products in the 11 United States. 12 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur- 13 poses of this section, the term ‘qualified product or service’ 14 means— 15 ‘‘(1) any product which is produced in an eco- 16 nomically distressed zone and which is integrated 17 into a medical product produced by the taxpayer, 18 and 19 ‘‘(2) any service which is provided in an eco- 20 nomically distressed zone and which is necessary to 21 the production of a medical product by the taxpayer 22 (including packaging). 23 ‘‘(e) RELATED PERSONS.—For purposes of this sec- 24 tion, persons shall be treated as related to each other if 25 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 10 •S 33 IS such persons would be treated as a single employer under 1 the regulations prescribed under section 52(b). 2 ‘‘(f) OTHER TERMS.—Terms used in this section 3 which are also used in section 1400AA–1 shall have the 4 same meaning as when used in such section. 5 ‘‘SEC. 1400AA–3. SPECIAL RULES TO SECURE THE NATIONAL 6 SUPPLY CHAIN. 7 ‘‘(a) IN GENERAL.—In the case of a qualified repatri- 8 ated pharmaceutical manufacturing facility, section 9 1400AA–1(a) shall be applied by substituting ‘60 percent’ 10 for ‘40 percent’. 11 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED- 12 IT FOR DEPRECIATION.—In the case of a taxpayer which 13 elects (at such time and in such manner as the Secretary 14 may provide) the application of this subsection with re- 15 spect to any qualified repatriated medical product manu- 16 facturing facility or qualified population health product 17 manufacturing facility— 18 ‘‘(1) section 1400AA–1(a)(3) shall not apply 19 with respect to any qualified medical product manu- 20 facturing facility property with respect to such facil- 21 ity, and 22 ‘‘(2) for purposes of section 168(k)— 23 ‘‘(A) such property shall be treated as 24 qualified property, and 25 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 11 •S 33 IS ‘‘(B) the applicable percentage with respect 1 to such property shall be 100 percent. 2 ‘‘(c) QUALIFIED REPATRIATED MEDICAL PRODUCT 3 MANUFACTURING FACILITY.—For purposes of this sec- 4 tion, the term ‘qualified repatriated medical product man- 5 ufacturing facility’ means any qualified medical product 6 manufacturing facility (as defined in section 1400AA–1) 7 the production of which was moved to an economically dis- 8 tressed zone from a foreign country that the United States 9 Trade Representative has determined could pose a risk to 10 the national supply chain because of political or social fac- 11 tors. 12 ‘‘SEC. 1400AA–4. DESIGNATION OF ECONOMICALLY DIS- 13 TRESSED ZONES. 14 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 15 the term ‘economically distressed zone’ means any popu- 16 lation census tract within the United States which— 17 ‘‘(1) has a poverty rate of not less than 35 per- 18 cent for each of the 5 most recent calendar years for 19 which information is available, or 20 ‘‘(2) satisfies each of the following require- 21 ments: 22 ‘‘(A) The census tract has pervasive pov- 23 erty, unemployment, low labor force participa- 24 tion, and general distress measured as a pro- 25 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 12 •S 33 IS longed period of economic decline measured by 1 real gross national product. 2 ‘‘(B) The census tract has a poverty rate 3 of not less than 30 percent for each of the 5 4 most recent calendar years for which informa- 5 tion is available. 6 ‘‘(C) The census tract has been designated 7 as such by the Secretary and the Secretary of 8 Commerce pursuant to an application under 9 subsection (b). 10 ‘‘(b) APPLICATION FOR DESIGNATION.— 11 ‘‘(1) IN GENERAL.—An application for designa- 12 tion as an economically distressed zone may be filed 13 by a State or local government in which the popu- 14 lation census tract to which the application applies 15 is located. 16 ‘‘(2) REQUIREMENTS.—Such application shall 17 include a strategic plan for accomplishing the pur- 18 poses of this subchapter, which— 19 ‘‘(A) describes the coordinated economic, 20 human, community, and physical development 21 plan and related activities proposed for the 22 nominated area, 23 ‘‘(B) describes the process by which the af- 24 fected community is a full partner in the proc- 25 VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33 kjohnson on DSK79L0C42PROD with BILLS 13 •S 33 IS ess of developing and implementing the plan 1 and the extent to which local institutions and 2 organizations have contributed to [Text truncated for display. Full text available on Congress.gov.]

Important: This plain English summary was generated by AI and is provided for informational purposes only. It is not legal advice. Always consult the official bill text on Congress.gov or a qualified attorney for legal matters.