II
118THCONGRESS
1
STSESSION 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
JANUARY24 (legislative day, JANUARY3), 2023
Mr. R
UBIOintroduced 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) I
NGENERAL.—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) A
LLOWANCE 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 OFDOUBLEBENEFIT.—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) D
EFINITIONS ANDSPECIALRULES.—For pur-7
poses of this section— 8
‘‘(1) E
CONOMICALLY DISTRESSED ZONE 9
WAGES.— 10
‘‘(A) I
N 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) L
IMITATION ON AMOUNT OF WAGES 22
TAKEN INTO ACCOUNT .— 23
‘‘(i) I
N 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) T
REATMENT 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) T
REATMENT 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) W
AGES.—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) A
LLOCABLE EMPLOYEE FRINGE BENEFIT 9
EXPENSES.— 10
‘‘(A) I
N 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) Q
UALIFIED 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) Q
UALIFIED 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) M
EDICAL 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) E
SSENTIAL 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) A
GGREGATION RULES.— 4
‘‘(A) I
N GENERAL.—For purposes of this 5
section, members of an affiliated group shall be 6
treated as a single taxpayer. 7
‘‘(B) A
FFILIATED 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) A
LLOWANCE OFCREDIT.—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) APPLICABLEPERCENTAGE.—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) E
LIGIBLEMEDICALPRODUCTMANUFAC-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) Q
UALIFIEDPRODUCT ORSERVICE.—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) R
ELATEDPERSONS.—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) O
THERTERMS.—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) I
NGENERAL.—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) E
LECTIONTOEXPENSE INLIEU OFTAXCRED-12
IT FORDEPRECIATION.—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) Q
UALIFIEDREPATRIATEDMEDICALPRODUCT 3
M
ANUFACTURING 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) I
NGENERAL.—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) A
PPLICATION FORDESIGNATION.— 11
‘‘(1) I
N 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) R
EQUIREMENTS.—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 the planning 3
process, 4
‘‘(C) identifies the amount of State, local, 5
and private resources that will be available in 6
the nominated area and the private/public part-7
nerships to be used, which may include partici-8
pation by, and cooperation with, universities, 9
medical centers, and other private and public 10
entities, 11
‘‘(D) identifies the funding requested 12
under any Federal program in support of the 13
proposed economic, human, community, and 14
physical development and related activities, 15
‘‘(E) identifies baselines, methods, and 16
benchmarks for measuring the success of car-17
rying out the strategic plan, including the ex-18
tent to which poor persons and families will be 19
empowered to become economically self-suffi-20
cient, and 21
‘‘(F) does not include any action to assist 22
any establishment in relocating from one area 23
outside the nominated area to the nominated 24
area, except that assistance for the expansion of 25
VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33
kjohnson on DSK79L0C42PROD with BILLS 14
•S 33 IS
an existing business entity through the estab-1
lishment of a new branch, affiliate, or sub-2
sidiary is permitted if— 3
‘‘(i) the establishment of the new 4
branch, affiliate, or subsidiary will not re-5
sult in a decrease in employment in the 6
area of original location or in any other 7
area where the existing business entity 8
conducts business operations, 9
‘‘(ii) there is no reason to believe that 10
the new branch, affiliate, or subsidiary is 11
being established with the intention of clos-12
ing down the operations of the existing 13
business entity in the area of its original 14
location or in any other area where the ex-15
isting business entity conducts business op-16
eration, and 17
‘‘(iii) includes such other information 18
as may be required by the Secretary and 19
the Secretary of Commerce. 20
‘‘(c) P
ERIOD FORWHICHDESIGNATIONSARE INEF-21
FECT.—Designation as an economically distressed zone 22
may be made at any time during the 10-year period begin-23
ning on the date of the enactment of this section, and shall 24
remain in effect with respect to such zone during the 15- 25
VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33
kjohnson on DSK79L0C42PROD with BILLS 15
•S 33 IS
year period beginning on the date of such designation. 1
Economically distressed zones described in subsection 2
(a)(1) shall take effect on the date of the enactment of 3
this Act and shall remain in effect during the 15-year pe-4
riod beginning on such date. 5
‘‘(d) T
ERRITORIES AND POSSESSIONS.—The term 6
‘United States’ includes the 50 States, the District of Co-7
lumbia, and the territories and possessions of the United 8
States. 9
‘‘(e) R
EGULATIONS.—The Secretary shall issue such 10
regulations or other guidance as may be necessary or ap-11
propriate to carry out the purposes of this section, includ-12
ing— 13
‘‘(1) not later than 30 days after the date of 14
the enactment of this section, a list of the population 15
census tracts described in subsection (a)(1), and 16
‘‘(2) not later than 60 days after the date of 17
the enactment of this section, regulations or other 18
guidance regarding the designation of population 19
census tracts described in subsection (a)(2).’’. 20
(b) C
LERICALAMENDMENT.—The table of sub-21
chapters for chapter 1 of the Internal Revenue Code of 22
1986 is amended by adding at the end the following new 23
item: 24
‘‘SUBCHAPTER AA—MEDICAL PRODUCT MANUFACTURING IN ECONOMICALLY
DISTRESSED ZONES’’.
VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6211 E:\BILLS\S33.IS S33
kjohnson on DSK79L0C42PROD with BILLS 16
•S 33 IS
(c) EFFECTIVEDATE.—The amendments made by 1
this section shall apply to taxable years beginning after 2
December 31, 2022. 3
SEC. 3. REPORT ON NEED FOR INCENTIVIZING DEVELOP-4
MENT OF THERAPIES. 5
Not later than 90 days after the date of enactment 6
of this Act, the Secretary of Health and Human Services 7
shall examine and report to the Congress on— 8
(1) the extent to which the health of aging indi-9
viduals in the United States, African Americans, 10
Hispanics, Native Americans, veterans, or other vul-11
nerable populations in the United States has been 12
disproportionately harmed by the COVID–19 pan-13
demic and prior epidemics and pandemics; 14
(2) the therapies currently available, and 15
whether there is a need for additional innovation 16
and development to produce therapies, to reduce the 17
exposure of vulnerable populations in the United 18
States to risk of disproportionate harm in epidemics 19
and pandemics; and 20
(3) whether the Secretary recommends pro-21
viding the same incentives for the development and 22
marketing of therapies described in paragraph (2) as 23
is provided under the Federal Food, Drug, and Cos-24
metic Act (21 U.S.C. 301 et seq.) with respect to 25
VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33
kjohnson on DSK79L0C42PROD with BILLS 17
•S 33 IS
qualified infectious disease products designated 1
under section 505E(d) of such Act (21 U.S.C. 2
355f(d)). 3
Æ
VerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6301 E:\BILLS\S33.IS S33
kjohnson on DSK79L0C42PROD with BILLS