II 

116TH CONGRESS 

2D SESSION S. 4467 

To rescue domestic medical product manufacturing activity by providing incentives in economically distressed areas of the United States and its possessions. 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medical Manufac5 turing, Economic Development, and Sustainability Act of 

6 2020’’ or the ‘‘MMEDS Act of 2020’’. 


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1 SEC. 2. ECONOMICALLY DISTRESSED ZONES. 

2 (a) IN GENERAL.—Chapter 1 of the Internal Rev3 enue Code of 1986 is amended by adding at the end the 

4 following new subchapter: 

5 ‘‘Subchapter AA—Medical Product Manufac6 turing in Economically Distressed Zones 

‘‘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. 

7 ‘‘SEC. 1400AA–1. MEDICAL PRODUCT MANUFACTURING IN 

8 ECONOMICALLY DISTRESSED ZONE CREDIT. 

9 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al10 lowed as a credit against the tax imposed by subtitle A 

11 for the taxable year an amount equal to 40 percent of the 

12 sum of— 

13 ‘‘(1) the aggregate amount of the taxpayer’s 

14 medical product manufacturing economically dis15 tressed zone wages for such taxable year, 

16 ‘‘(2) the allocable employee fringe benefit ex17 penses of the taxpayer for such taxable year, and 

18 ‘‘(3) the depreciation and amortization allow19 ances of the taxpayer for the taxable year with re20 spect to qualified medical product manufacturing fa21 cility property. 


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1 ‘‘(b) DENIAL OF DOUBLE BENEFIT.—Any wages or 

2 other expenses taken into account in determining the cred3 it under this section may not be taken into account in de4 termining the credit under sections 41, and any other pro5 vision determined by the Secretary to be substantially 

6 similar. 

7 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur8 poses of this section— 

9 ‘‘(1) ECONOMICALLY DISTRESSED ZONE

10 WAGES.— 

11 ‘‘(A) IN GENERAL.—The term ‘economi12 cally distressed zone wages’ means amounts 

13 paid or incurred for wages during the taxable 

14 year which are— 

15 ‘‘(i) in connection with the active con16 duct of a trade or business of the taxpayer, 

17 and 

18 ‘‘(ii) paid or incurred for an employee 

19 the principal place of employment of whom 

20 is in a qualified medical product manufac21 turing facility of such taxpayer. 

22 ‘‘(B) LIMITATION ON AMOUNT OF WAGES

23 TAKEN INTO ACCOUNT.— 

24 ‘‘(i) IN GENERAL.—The amount of 

25 wages which may be taken into account 


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1 under subparagraph (A) with respect to 

2 any employee for any taxable year shall 

3 not exceed the contribution and benefit 

4 base determined under section 230 of the 

5 Social Security Act for the calendar year 

6 in which such taxable year begins. 

7 ‘‘(ii) TREATMENT OF PART-TIME EM8 PLOYEES, ETC.—If— 

9 ‘‘(I) any employee is not em10 ployed by the taxpayer on a substan11 tially full-time basis at all times dur12 ing the taxable year, or 

13 ‘‘(II) the principal place of em14 ployment of any employee is not with15 in an economically distressed zone at 

16 all times during the taxable year, 

17 the limitation applicable under clause (i) 

18 with respect to such employee shall be the 

19 appropriate portion (as determined by the 

20 Secretary) of the limitation which would 

21 otherwise be in effect under clause (i). 

22 ‘‘(C) TREATMENT OF CERTAIN EMPLOY23 EES.—The term ‘economically distressed zone 

24 wages’ shall not include any wages paid to em25 ployees who are assigned by the employer to 


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1 perform services for another person, unless the 

2 principal trade or business of the employer is to 

3 make employees available for temporary periods 

4 to other persons in return for compensation. 

5 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT

6 EXPENSES.— 

7 ‘‘(A) IN GENERAL.—The term ‘allocable 

8 employee fringe benefit expenses’ means the ag9 gregate amount allowable as a deduction under 

10 this chapter to the taxpayer for the taxable year 

11 for the following amounts which are allocable to 

12 employment in a qualified medical product 

13 manufacturing facility: 

14 ‘‘(i) Employer contributions under a 

15 stock bonus, pension, profit-sharing, or an16 nuity plan. 

17 ‘‘(ii) Employer-provided coverage 

18 under any accident or health plan for em19 ployees. 

20 ‘‘(iii) The cost of life or disability in21 surance provided to employees. 

22 ‘‘(B) ALLOCATION.—For purposes of sub23 paragraph (A), an amount shall be treated as 

24 allocable to a qualified medical product manu25 facturing facility only if such amount is with reVerDate Sep 11 2014 02:40 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4467.IS S4467

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1 spect to employment of an individual for serv2 ices provided, and the principal place of employ3 ment of whom is, in such facility. 

4 ‘‘(3) QUALIFIED MEDICAL PRODUCT MANUFAC5 TURING FACILITY.—The term ‘qualified medical 

6 product manufacturing facility’ means any facility 

7 that— 

8 ‘‘(A) researches and develops or produces 

9 medical products or essential components of 

10 medical products, and 

11 ‘‘(B) is located within an economically dis12 tressed zone. 

13 ‘‘(4) QUALIFIED MEDICAL PRODUCT MANUFAC14 TURING FACILITY PROPERTY.—The term ‘qualified 

15 medical product manufacturing facility property’ 

16 means any property used in (or consisting of) a 

17 qualified medical product manufacturing facility if 

18 such property is directly connected to the research, 

19 development, or production of a medical product. 

20 ‘‘(5) MEDICAL PRODUCT; ESSENTIAL COMPO21 NENT.— 

22 ‘‘(A) MEDICAL PRODUCT.—The term ‘med23 ical product’ means— 

24 ‘‘(i) a drug that— 


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1 ‘‘(I) is a prescription drug sub2 ject to regulation under section 505 of 

3 the Federal Food, Drug, and Cos4 metic Act (21 U.S.C. 355) or section 

5 351 of the Public Health Service Act 

6 (42 U.S.C. 262); 

7 ‘‘(II) is subject to regulation 

8 under section 802 of the Federal 

9 Food, Drug, and Cosmetic Act (21 

10 U.S.C. 382); or 

11 ‘‘(III) is described in section 

12 201(jj) of such Act (21 U.S.C. 

13 321(jj)); or 

14 ‘‘(ii) a device, as defined in section 

15 201(h) of such Act (21 U.S.C. 321(h)). 

16 ‘‘(B) ESSENTIAL COMPONENT.—The term 

17 ‘essential component’ means, with respect to a 

18 medical product— 

19 ‘‘(i) an active pharmaceutical ingre20 dient; or 

21 ‘‘(ii) a protein, antibody, enzyme, hor22 mone, or other organic material that is an 

23 active ingredient in a biological product. 

24 ‘‘(6) AGGREGATION RULES.— 


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1 ‘‘(A) IN GENERAL.—For purposes of this 

2 section, members of an affiliated group shall be 

3 treated as a single taxpayer. 

4 ‘‘(B) AFFILIATED GROUP.—The term ‘af5 filiated group’ means an affiliated group (as de6 fined in section 1504(a), determined without re7 gard to section 1504(b)(3)) one or more mem8 bers of which are engaged in the active conduct 

9 of a trade or business within an economically 

10 distressed zone. 

11 ‘‘SEC. 1400AA–2. CREDIT FOR ECONOMICALLY DISTRESSED 

12 ZONE PRODUCTS AND SERVICES ACQUIRED 

13 BY DOMESTIC MEDICAL PRODUCT MANUFAC14 TURERS. 

15 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli16 gible medical product manufacturer, there shall be allowed 

17 as a credit against the tax imposed by subtitle A for the 

18 taxable year an amount equal to the applicable percentage 

19 of the aggregate amounts paid or incurred by the taxpayer 

20 during such taxable year for qualified products or services. 

21 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

22 this section, the term applicable percentage means— 

23 ‘‘(1) 30 percent in the case of amounts paid or 

24 incurred to persons not described in paragraph (2) 

25 or (3), and 


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1 ‘‘(2) 5 percent in the case of amounts paid or 

2 incurred to a related person. 

3 ‘‘(c) ELIGIBLE MEDICAL PRODUCT MANUFAC4 TURER.—For purposes of this section, the term ‘eligible 

5 medical product manufacturer’ means any person in the 

6 trade or business of producing medical products in the 

7 United States. 

8 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur9 poses of this section, the term ‘qualified product or service’ 

10 means— 

11 ‘‘(1) any product which is produced in an eco12 nomically distressed zone and which is integrated 

13 into a medical product produced by the taxpayer, 

14 and 

15 ‘‘(2) any service which is provided in an eco16 nomically distressed zone and which is necessary to 

17 the production of a medical product by the taxpayer 

18 (including packaging). 

19 ‘‘(e) RELATED PERSONS.—For purposes of this sec20 tion, persons shall be treated as related to each other if 

21 such persons would be treated as a single employer under 

22 the regulations prescribed under section 52(b). 

23 ‘‘(f) OTHER TERMS.—Terms used in this section 

24 which are also used in section 1400AA–1 shall have the 

25 same meaning as when used in such section. 


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1 ‘‘SEC. 1400AA–3. SPECIAL RULES TO SECURE THE NATIONAL 

2 SUPPLY CHAIN. 

3 ‘‘(a) IN GENERAL.—In the case of a qualified repatri4 ated pharmaceutical manufacturing facility, section 

5 1400AA–1(a) shall be applied by substituting ‘60 percent’ 

6 for ‘40 percent’. 

7 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED8 IT FOR DEPRECIATION.—In the case of a taxpayer which 

9 elects (at such time and in such manner as the Secretary 

10 may provide) the application of this subsection with re11 spect to any qualified repatriated medical product manu12 facturing facility or qualified population health product 

13 manufacturing facility— 

14 ‘‘(1) section 1400AA–1(a)(3) shall not apply 

15 with respect to any qualified medical product manu16 facturing facility property with respect to such facil17 ity, and 

18 ‘‘(2) for purposes of section 168(k)— 

19 ‘‘(A) such property shall be treated as 

20 qualified property, and 

21 ‘‘(B) the applicable percentage with respect 

22 to such property shall be 100 percent. 

23 ‘‘(c) QUALIFIED REPATRIATED MEDICAL PRODUCT

24 MANUFACTURING FACILITY.—For purposes of this sec25 tion, the term ‘qualified repatriated medical product man26 ufacturing facility’ means any qualified medical product 


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1 manufacturing facility (as defined in section 1400AA–1) 

2 the production of which was moved to an economically dis3 tressed zone from a foreign country that the United States 

4 Trade Representative has determined could pose a risk to 

5 the national supply chain because of political or social fac6 tors. 

7 ‘‘SEC. 1400AA–4. DESIGNATION OF ECONOMICALLY DIS8 TRESSED ZONES. 

9 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 

10 the term ‘economically distressed zone’ means any popu11 lation census tract within the United States which— 

12 ‘‘(1) has a poverty rate of not less than 35 per13 cent for each of the 5 most recent calendar years for 

14 which information is available, or 

15 ‘‘(2) satisfies each of the following require16 ments: 

17 ‘‘(A) The census tract has pervasive pov18 erty, unemployment, low labor force participa19 tion, and general distress measured as a pro20 longed period of economic decline measured by 

21 real gross national product. 

22 ‘‘(B) The census tract has a poverty rate 

23 of not less than 30 percent for each of the 5 

24 most recent calendar years for which informa25 tion is available. 


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1 ‘‘(C) The census tract has been designated 

2 as such by the Secretary and the Secretary of 

3 Commerce pursuant to an application under 

4 subsection (b). 

5 ‘‘(b) APPLICATION FOR DESIGNATION.— 

6 ‘‘(1) IN GENERAL.—An application for designa7 tion as an economically distressed zone may be filed 

8 by a State or local government in which the popu9 lation census tract to which the application applies 

10 is located. 

11 ‘‘(2) REQUIREMENTS.—Such application shall 

12 include a strategic plan for accomplishing the pur13 poses of this subchapter, which— 

14 ‘‘(A) describes the coordinated economic, 

15 human, community, and physical development 

16 plan and related activities proposed for the 

17 nominated area, 

18 ‘‘(B) describes the process by which the af19 fected community is a full partner in the proc20 ess of developing and implementing the plan 

21 and the extent to which local institutions and 

22 organizations have contributed to the planning 

23 process, 

24 ‘‘(C) identifies the amount of State, local, 

25 and private resources that will be available in 


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1 the nominated area and the private/public part2 nerships to be used, which may include partici3 pation by, and cooperation with, universities, 

4 medical centers, and other private and public 

5 entities, 

6 ‘‘(D) identifies the funding requested 

7 under any Federal program in support of the 

8 proposed economic, human, community, and 

9 physical development and related activities, 

10 ‘‘(E) identifies baselines, methods, and 

11 benchmarks for measuring the success of car12 rying out the strategic plan, including the ex13 tent to which poor persons and families will be 

14 empowered to become economically self-suffi15 cient, and 

16 ‘‘(F) does not include any action to assist 

17 any establishment in relocating from one area 

18 outside the nominated area to the nominated 

19 area, except that assistance for the expansion of 

20 an existing business entity through the estab21 lishment of a new branch, affiliate, or sub22 sidiary is permitted if— 

23 ‘‘(i) the establishment of the new 

24 branch, affiliate, or subsidiary will not re25 sult in a decrease in employment in the 


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1 area of original location or in any other 

2 area where the existing business entity 

3 conducts business operations, 

4 ‘‘(ii) there is no reason to believe that 

5 the new branch, affiliate, or subsidiary is 

6 being established with the intention of clos7 ing down the operations of the existing 

8 business entity in the area of its original 

9 location or in any other area where the ex10 isting business entity conducts business op11 eration, and 

12 ‘‘(iii) includes such other information 

13 as may be required by the Secretary and 

14 the Secretary of Commerce. 

15 ‘‘(c) PERIOD FOR WHICH DESIGNATIONS ARE IN EF16 FECT.—Designation as an economically distressed zone 

17 may be made at any time during the 10-year period begin18 ning on the date of the enactment of this section, and shall 

19 remain in effect with respect to such zone during the 15- 

20 year period beginning on the date of such designation. 

21 Economically distressed zones described in subsection 

22 (a)(1) shall take effect on the date of the enactment of 

23 this Act and shall remain in effect during the 15-year pe24 riod beginning on such date. 


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1 ‘‘(d) TERRITORIES AND POSSESSIONS.—The term 

2 ‘United States’ includes the 50 States, the District of Co3 lumbia, and the territories and possessions of the United 

4 States. 

5 ‘‘(e) REGULATIONS.—The Secretary shall issue such 

6 regulations or other guidance as may be necessary or ap7 propriate to carry out the purposes of this section, includ8 ing— 

9 ‘‘(1) not later than 30 days after the date of 

10 the enactment of this section, a list of the population 

11 census tracts described in subsection (a)(1), and 

12 ‘‘(2) not later than 60 days after the date of 

13 the enactment of this section, regulations or other 

14 guidance regarding the designation of population 

15 census tracts described in subsection (a)(2).’’. 

16 (b) CLERICAL AMENDMENT.—The table of sub17 chapters for chapter 1 of the Internal Revenue Code of 

18 1986 is amended by adding at the end the following new 

19 item: 

‘‘SUBCHAPTER AA—MEDICAL PRODUCT MANUFACTURING IN ECONOMICALLY

DISTRESSED ZONES’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2019. 


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1 SEC. 3. REPORT ON NEED FOR INCENTIVIZING DEVELOP2 MENT OF THERAPIES. 

3 Not later than 90 days after the date of enactment 

4 of this Act, the Secretary of Health and Human Services 

5 shall examine and report to the Congress on— 

6 (1) the extent to which the health of aging indi7 viduals in the United States, African Americans, 

8 Hispanics, Native Americans, veterans, or other vul9 nerable populations in the United States has been 

10 disproportionately harmed by the COVID–19 pan11 demic and prior epidemics and pandemics; 

12 (2) the therapies currently available, and 

13 whether there is a need for additional innovation 

14 and development to produce therapies, to reduce the 

15 exposure of vulnerable populations in the United 

16 States to risk of disproportionate harm in epidemics 

17 and pandemics; and 

18 (3) whether the Secretary recommends pro19 viding the same incentives for the development and 

20 marketing of therapies described in paragraph (2) as 

21 is provided under the Federal Food, Drug, and Cos22 metic Act (21 U.S.C. 301 et seq.) with respect to 

23 qualified infectious disease products designated 

24 under section 505E(d) of such Act (21 U.S.C. 

25 355f(d)). 

Æ 


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