II 

118TH CONGRESS 

1ST SESSION S. 33 

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 

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. 

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 2023’’ or the ‘‘MMEDS Act of 2023’’. 


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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 ‘‘(D) WAGES.—For purposes of this para6 graph, the term ‘wages’ shall not include any 

7 amounts which are allocable employee fringe 

8 benefit expenses. 

9 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT

10 EXPENSES.— 

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

12 employee fringe benefit expenses’ means the ag13 gregate amount allowable as a deduction under 

14 this chapter to the taxpayer for the taxable year 

15 for the following amounts which are allocable to 

16 employment in a qualified medical product 

17 manufacturing facility: 

18 ‘‘(i) Employer contributions under a 

19 stock bonus, pension, profit-sharing, or an20 nuity plan. 

21 ‘‘(ii) Employer-provided coverage 

22 under any accident or health plan for em23 ployees. 

24 ‘‘(iii) The cost of life or disability in25 surance provided to employees. 


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1 ‘‘(B) ALLOCATION.—For purposes of sub2 paragraph (A), an amount shall be treated as 

3 allocable to a qualified medical product manu4 facturing facility only if such amount is with re5 spect to employment of an individual for serv6 ices provided, and the principal place of employ7 ment of whom is, in such facility. 

8 ‘‘(3) QUALIFIED MEDICAL PRODUCT MANUFAC9 TURING FACILITY.—The term ‘qualified medical 

10 product manufacturing facility’ means any facility 

11 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 dis16 tressed zone. 

17 ‘‘(4) QUALIFIED MEDICAL PRODUCT MANUFAC18 TURING FACILITY PROPERTY.—The term ‘qualified 

19 medical product manufacturing facility property’ 

20 means any property originally used in (or consisting 

21 of) a qualified medical product manufacturing facil22 ity if such property is directly connected to the re23 search, development, or production of a medical 

24 product. 


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1 ‘‘(5) MEDICAL PRODUCT; ESSENTIAL COMPO2 NENT.— 

3 ‘‘(A) MEDICAL PRODUCT.—The term ‘med4 ical product’ means— 

5 ‘‘(i) a drug that— 

6 ‘‘(I) is a prescription drug sub7 ject to regulation under section 505 of 

8 the Federal Food, Drug, and Cos9 metic Act (21 U.S.C. 355) or section 

10 351 of the Public Health Service Act 

11 (42 U.S.C. 262), 

12 ‘‘(II) is subject to regulation 

13 under section 802 of the Federal 

14 Food, Drug, and Cosmetic Act (21 

15 U.S.C. 382), or 

16 ‘‘(III) is described in section 

17 201(jj) of such Act (21 U.S.C. 

18 321(jj)), or 

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

20 201(h) of such Act (21 U.S.C. 321(h)). 

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

22 ‘essential component’ means, with respect to a 

23 medical product— 

24 ‘‘(i) an active pharmaceutical ingre25 dient, or 


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1 ‘‘(ii) a protein, antibody, enzyme, hor2 mone, or other organic material that is an 

3 active ingredient in a biological product. 

4 ‘‘(6) AGGREGATION RULES.— 

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

6 section, members of an affiliated group shall be 

7 treated as a single taxpayer. 

8 ‘‘(B) AFFILIATED GROUP.—The term ‘af9 filiated group’ means an affiliated group (as de10 fined in section 1504(a), determined without re11 gard to section 1504(b)(3)) one or more mem12 bers of which are engaged in the active conduct 

13 of a trade or business within an economically 

14 distressed zone. 

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

16 ZONE PRODUCTS AND SERVICES ACQUIRED 

17 BY DOMESTIC MEDICAL PRODUCT MANUFAC18 TURERS. 

19 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli20 gible medical product manufacturer, there shall be allowed 

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

22 taxable year an amount equal to the applicable percentage 

23 of the aggregate amounts paid or incurred by the taxpayer 

24 during such taxable year for qualified products or services. 


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

2 this section, the term applicable percentage means— 

3 ‘‘(1) 30 percent in the case of amounts paid or 

4 incurred to persons not described in paragraph (2) 

5 or (3), and 

6 ‘‘(2) 5 percent in the case of amounts paid or 

7 incurred to a related person. 

8 ‘‘(c) ELIGIBLE MEDICAL PRODUCT MANUFAC9 TURER.—For purposes of this section, the term ‘eligible 

10 medical product manufacturer’ means any person in the 

11 trade or business of producing medical products in the 

12 United States. 

13 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur14 poses of this section, the term ‘qualified product or service’ 

15 means— 

16 ‘‘(1) any product which is produced in an eco17 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 eco21 nomically distressed zone and which is necessary to 

22 the production of a medical product by the taxpayer 

23 (including packaging). 

24 ‘‘(e) RELATED PERSONS.—For purposes of this sec25 tion, persons shall be treated as related to each other if 


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1 such persons would be treated as a single employer under 

2 the regulations prescribed under section 52(b). 

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

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

5 same meaning as when used in such section. 

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

7 SUPPLY CHAIN. 

8 ‘‘(a) IN GENERAL.—In the case of a qualified repatri9 ated pharmaceutical manufacturing facility, section 

10 1400AA–1(a) shall be applied by substituting ‘60 percent’ 

11 for ‘40 percent’. 

12 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED13 IT FOR DEPRECIATION.—In the case of a taxpayer which 

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

15 may provide) the application of this subsection with re16 spect to any qualified repatriated medical product manu17 facturing facility or qualified population health product 

18 manufacturing facility— 

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

20 with respect to any qualified medical product manu21 facturing facility property with respect to such facil22 ity, and 

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

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

25 qualified property, and 


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1 ‘‘(B) the applicable percentage with respect 

2 to such property shall be 100 percent. 

3 ‘‘(c) QUALIFIED REPATRIATED MEDICAL PRODUCT

4 MANUFACTURING FACILITY.—For purposes of this sec5 tion, the term ‘qualified repatriated medical product man6 ufacturing facility’ means any qualified medical product 

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

8 the production of which was moved to an economically dis9 tressed zone from a foreign country that the United States 

10 Trade Representative has determined could pose a risk to 

11 the national supply chain because of political or social fac12 tors. 

13 ‘‘SEC. 1400AA–4. DESIGNATION OF ECONOMICALLY DIS14 TRESSED ZONES. 

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

16 the term ‘economically distressed zone’ means any popu17 lation census tract within the United States which— 

18 ‘‘(1) has a poverty rate of not less than 35 per19 cent for each of the 5 most recent calendar years for 

20 which information is available, or 

21 ‘‘(2) satisfies each of the following require22 ments: 

23 ‘‘(A) The census tract has pervasive pov24 erty, unemployment, low labor force participa25 tion, and general distress measured as a proVerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33

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1 longed period of economic decline measured by 

2 real gross national product. 

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

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

5 most recent calendar years for which informa6 tion is available. 

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

8 as such by the Secretary and the Secretary of 

9 Commerce pursuant to an application under 

10 subsection (b). 

11 ‘‘(b) APPLICATION FOR DESIGNATION.— 

12 ‘‘(1) IN GENERAL.—An application for designa13 tion as an economically distressed zone may be filed 

14 by a State or local government in which the popu15 lation census tract to which the application applies 

16 is located. 

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

18 include a strategic plan for accomplishing the pur19 poses of this subchapter, which— 

20 ‘‘(A) describes the coordinated economic, 

21 human, community, and physical development 

22 plan and related activities proposed for the 

23 nominated area, 

24 ‘‘(B) describes the process by which the af25 fected community is a full partner in the procVerDate Sep 11 2014 04:19 Jan 26, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S33.IS S33

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1 ess of developing and implementing the plan 

2 and the extent to which local institutions and 

3 organizations have contributed to the planning 

4 process, 

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

6 and private resources that will be available in 

7 the nominated area and the private/public part8 nerships to be used, which may include partici9 pation by, and cooperation with, universities, 

10 medical centers, and other private and public 

11 entities, 

12 ‘‘(D) identifies the funding requested 

13 under any Federal program in support of the 

14 proposed economic, human, community, and 

15 physical development and related activities, 

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

17 benchmarks for measuring the success of car18 rying out the strategic plan, including the ex19 tent to which poor persons and families will be 

20 empowered to become economically self-suffi21 cient, and 

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

23 any establishment in relocating from one area 

24 outside the nominated area to the nominated 

25 area, except that assistance for the expansion of 


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1 an existing business entity through the estab2 lishment of a new branch, affiliate, or sub3 sidiary is permitted if— 

4 ‘‘(i) the establishment of the new 

5 branch, affiliate, or subsidiary will not re6 sult in a decrease in employment in the 

7 area of original location or in any other 

8 area where the existing business entity 

9 conducts business operations, 

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

11 the new branch, affiliate, or subsidiary is 

12 being established with the intention of clos13 ing down the operations of the existing 

14 business entity in the area of its original 

15 location or in any other area where the ex16 isting business entity conducts business op17 eration, and 

18 ‘‘(iii) includes such other information 

19 as may be required by the Secretary and 

20 the Secretary of Commerce. 

21 ‘‘(c) PERIOD FOR WHICH DESIGNATIONS ARE IN EF22 FECT.—Designation as an economically distressed zone 

23 may be made at any time during the 10-year period begin24 ning on the date of the enactment of this section, and shall 

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


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1 year period beginning on the date of such designation. 

2 Economically distressed zones described in subsection 

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

4 this Act and shall remain in effect during the 15-year pe5 riod beginning on such date. 

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

7 ‘United States’ includes the 50 States, the District of Co8 lumbia, and the territories and possessions of the United 

9 States. 

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

11 regulations or other guidance as may be necessary or ap12 propriate to carry out the purposes of this section, includ13 ing— 

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

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

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

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

18 the enactment of this section, regulations or other 

19 guidance regarding the designation of population 

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

21 (b) CLERICAL AMENDMENT.—The table of sub22 chapters for chapter 1 of the Internal Revenue Code of 

23 1986 is amended by adding at the end the following new 

24 item: 

‘‘SUBCHAPTER AA—MEDICAL PRODUCT MANUFACTURING IN ECONOMICALLY

DISTRESSED ZONES’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2022. 

4 SEC. 3. REPORT ON NEED FOR INCENTIVIZING DEVELOP5 MENT OF THERAPIES. 

6 Not later than 90 days after the date of enactment 

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

8 shall examine and report to the Congress on— 

9 (1) the extent to which the health of aging indi10 viduals in the United States, African Americans, 

11 Hispanics, Native Americans, veterans, or other vul12 nerable populations in the United States has been 

13 disproportionately harmed by the COVID–19 pan14 demic and prior epidemics and pandemics; 

15 (2) the therapies currently available, and 

16 whether there is a need for additional innovation 

17 and development to produce therapies, to reduce the 

18 exposure of vulnerable populations in the United 

19 States to risk of disproportionate harm in epidemics 

20 and pandemics; and 

21 (3) whether the Secretary recommends pro22 viding the same incentives for the development and 

23 marketing of therapies described in paragraph (2) as 

24 is provided under the Federal Food, Drug, and Cos25 metic Act (21 U.S.C. 301 et seq.) with respect to 


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1 qualified infectious disease products designated 

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

3 355f(d)). 

Æ 


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