Federal

MMEDS Act of 2023

Source: Congress.gov · 4,610 words in original text

What This Bill Does

This bill creates tax credits and incentives for companies that manufacture medical products in economically distressed areas of the United States and its territories. It also establishes requirements for the federal government to support development of drugs and devices to help vulnerable populations during disease outbreaks and pandemics.

Who It Affects

Medical manufacturing companies operating in economically distressed zones, suppliers to medical manufacturers in distressed areas, minority-owned businesses that supply medical manufacturers, state and local governments, the Department of Health and Human Services, and the Department of Commerce.

Key Provisions

• Companies get a tax credit equal to 40 percent of wages paid to workers at medical manufacturing facilities in economically distressed zones, plus employee benefits costs and equipment depreciation (Sec. 1400AA-1(a)) • Medical manufacturers get tax credits for buying products or services from suppliers located in economically distressed zones, with higher credits (50-60 percent) for purchases from unrelated minority-owned businesses (Sec. 1400AA-2(a)) • Higher tax credits (60 percent instead of 40 percent) apply to facilities that moved manufacturing operations from foreign countries considered risky to the national supply chain or that produce specific health products identified by the Health and Human Services Secretary (Sec. 1400AA-3(a)) • Economically distressed zones are areas where at least 35 percent of people live in poverty for five consecutive years, or areas with at least 30 percent poverty that state and local governments nominate through a strategic plan (Sec. 1400AA-4(a)) • The Secretary of Health and Human Services must report to Congress within 90 days on whether vulnerable populations (older adults, minorities, veterans and others) suffered disproportionate harm from COVID-19 and prior pandemics, and whether new incentives should encourage development of health products to protect these groups (Sec. 319L(c)(9))

What Changes

If passed, medical manufacturers will be able to claim federal tax credits for wages and equipment investments at facilities in economically distressed zones. They will also receive tax credits for purchasing products and services from suppliers in these zones. The federal government will be required to collaborate across agencies to distribute approved health products quickly to vulnerable populations during disease outbreaks. The Secretary of Health and Human Services must examine and report on disparities in pandemic harm and whether additional incentives are needed.

Important Definitions

• "Medical product" means prescription drugs regulated by the Food and Drug Administration, drugs regulated for import purposes, or medical devices (Sec. 1400AA-1(c)(5)(A)) • "Essential component" means active pharmaceutical ingredients or biological materials that are active ingredients in drugs (Sec. 1400AA-1(c)(5)(B)) • "Population health product" means a widely available drug to treat underlying diseases that, when combined with pandemic influenza or emerging infectious disease, may harm vulnerable populations during outbreaks (Sec. 319L(a)(11)) • "Vulnerable American populations" means children, pregnant women, older adults, minority populations, and other at-risk individuals (Sec. 319L(a)(12)) • "Qualified individual" for minority business purposes means someone of Asian-Indian, Asian-Pacific, Black, Hispanic, or Native American origin or descent who is a U.S. citizen or legal resident of the United States or its territories (Sec. 1400AA-2(e)(2))

Effective Date

The tax credit provisions apply to taxable years beginning after December 31, 2022 (Sec. 2(b)). The Secretary of Health and Human Services must report to Congress within 90 days of the bill's enactment (Sec. 319L(c)(9)).

I 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. GONZA´LEZ-COLO´N (for herself and Ms. SALAZAR) introduced the fol- lowing 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 consider- ation of such provisions as fall within the jurisdiction of the committee concerned A BILL To rescue domestic medical manufacturing activity by pro- viding 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 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 447 IH 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 Manufacturing in 5 Economically Distressed Zones 6 ‘‘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 ECONOMI- 7 CALLY 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 40 percent of the 11 sum of— 12 ‘‘(1) the aggregate amount of the taxpayer’s 13 medical manufacturing economically distressed zone 14 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 manufacturing facility 20 property. 21 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 447 IH ‘‘(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 of an employee by 13 the taxpayer for the taxable 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 manufacturing fa- 20 cility 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 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 447 IH 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 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 447 IH 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 manufac- 16 turing facility and which are not included as 17 economically distressed zone wages pursuant to 18 this subsection: 19 ‘‘(i) Employer contributions under a 20 stock bonus, pension, profit-sharing, or an- 21 nuity plan. 22 ‘‘(ii) Employer-provided coverage 23 under any accident or health plan for em- 24 ployees. 25 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 447 IH ‘‘(iii) The cost of life or disability in- 1 surance provided to employees. 2 ‘‘(B) ALLOCATION.—For purposes of sub- 3 paragraph (A), an amount shall be treated as 4 allocable to a qualified medical manufacturing 5 facility only if such amount is with respect to 6 employment of an individual for services pro- 7 vided, and the principal place of employment of 8 whom is, in such facility. 9 ‘‘(3) QUALIFIED MEDICAL MANUFACTURING FA- 10 CILITY.—The term ‘qualified medical manufacturing 11 facility’ means any facility that— 12 ‘‘(A) researches and develops or produces 13 medical products or essential components of 14 medical products, and 15 ‘‘(B) is located within an economically dis- 16 tressed zone. 17 ‘‘(4) QUALIFIED MEDICAL MANUFACTURING FA- 18 CILITY PROPERTY.—The term ‘qualified medical 19 manufacturing facility property’ means any property 20 used in (or consisting of) a qualified medical manu- 21 facturing facility if such property is directly con- 22 nected to the research, development, or production 23 of a medical product. 24 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 447 IH ‘‘(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 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 447 IH ‘‘(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 MANUFACTURERS. 17 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli- 18 gible medical manufacturer, there shall be allowed as a 19 credit against the tax imposed by subtitle A for the taxable 20 year an amount equal to the applicable percentage of the 21 aggregate amounts paid or incurred by the taxpayer dur- 22 ing such taxable year for qualified economically distressed 23 zone products or services. 24 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 447 IH ‘‘(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), 5 ‘‘(2) 40 percent in the case of amounts paid or 6 incurred to an unrelated minority business, and 7 ‘‘(3) 5 percent in the case of amounts paid or 8 incurred to a related person. 9 ‘‘(c) ELIGIBLE MEDICAL MANUFACTURER.—For 10 purposes of this section, the term ‘eligible medical manu- 11 facturer’ means any person in the trade or business of pro- 12 ducing medical products in the United States. 13 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur- 14 poses of this section, the term ‘qualified product or service’ 15 means— 16 ‘‘(1) any product which is produced in an eco- 17 nomically distressed zone and which is integrated 18 into a medical product produced by the taxpayer, 19 and 20 ‘‘(2) any service which is provided in an eco- 21 nomically distressed zone and which is necessary to 22 the production of a medical product by the taxpayer 23 (including packaging). 24 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 447 IH ‘‘(e) MINORITY BUSINESS.—For purposes of this sec- 1 tion— 2 ‘‘(1) IN GENERAL.—The term ‘minority busi- 3 ness’ means— 4 ‘‘(A) a sole proprietorship carried on by a 5 qualified individual, or 6 ‘‘(B) a corporation or partnership— 7 ‘‘(i) at least 50 percent of the owner- 8 ship interests in which are held by one or 9 more qualified individuals, and 10 ‘‘(ii) of which a qualified individual is 11 the president or chief executive officer (or 12 a substantially equivalent position). 13 ‘‘(2) QUALIFIED INDIVIDUAL.—The term ‘quali- 14 fied individual’ means any individual who— 15 ‘‘(A) is of Asian-Indian, Asian-Pacific, 16 Black, Hispanic, or Native American origin or 17 descent, and 18 ‘‘(B) is a United States citizen or legal 19 resident of the United States or any of its terri- 20 tories or possessions. 21 ‘‘(f) RELATED PERSONS.—For purposes of this sec- 22 tion, persons shall be treated as related to each other if 23 such persons would be treated as a single employer under 24 the regulations prescribed under section 52(b). 25 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 447 IH ‘‘(g) OTHER TERMS.—Terms used in this section 1 which are also used in section 1400AA–1 shall have the 2 same meaning as when used in such section. 3 ‘‘SEC. 1400AA–3. SPECIAL RULES TO SECURE THE NATIONAL 4 SUPPLY CHAIN AND FOR THE PRODUCTION 5 OF POPULATION HEALTH PRODUCTS. 6 ‘‘(a) IN GENERAL.—In the case of a qualified repatri- 7 ated medical manufacturing facility or a qualified popu- 8 lation health product manufacturing facility— 9 ‘‘(1) section 1400AA–1(a) shall be applied by 10 substituting ‘60 percent’ for ‘40 percent’, and 11 ‘‘(2) section 1400AA–2(a) shall be applied— 12 ‘‘(A) by substituting ‘50 percent’ for ‘30 13 percent’, and 14 ‘‘(B) by substituting ‘60 percent’ for ‘40 15 percent’. 16 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED- 17 IT FOR DEPRECIATION.—In the case of a taxpayer which 18 elects (at such time and in such manner as the Secretary 19 may provide) the application of this subsection with re- 20 spect to any qualified repatriated medical manufacturing 21 facility or qualified population health product manufac- 22 turing facility— 23 VerDate Sep 11 2014 07:26 Feb 01, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H447.IH H447 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 447 IH ‘‘(1) section 1400AA–1(a)(3) shall not apply 1 with respect to any qualified medical manufacturing 2 facility property with respect to such facility, and 3 ‘‘(2) for purposes of section 168(k)— 4 ‘‘(A) such property shall be treated as 5 qualified property, and 6 ‘‘(B) the applicable percentage with respect 7 to such property shall be 100 percent. 8 ‘‘(c) QUALIFIED REPATRIATED MEDICAL MANUFAC- 9 TURING FACILITY.—For purposes of this section, the term 10 ‘qualified repatriated medical manufacturing facility’ 11 means any qualified medical manufacturing facility (as de- 12 fined in section 1400AA–1) the production of which was 13 moved to an economically distressed zone from a foreign 14 country that the United States Trade Representative has 15 determined could pose a risk to the national supply chain 16 because of political or social factors. 17 ‘‘(d) QUALIFIED POPULATION HEALTH PRODUCT 18 MANUFACTURING FACILITY.—For purposes of this sec- 19 tion, the term ‘qualified population health product manu- 20 facturing facility’ means any qualified medical manufac- 21 turing facility (as defined in section 1400AA–1) that pro- 22 duces a population health product (as defined in section 23 319L(a)(11) of the Public Health Service Act) which the 24 Secretary of Health and Human Services has identified 25 VerDate Sep 11 2014 07:26 [Text truncated for display. Full text available on Congress.gov.]

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