I 

116TH CONGRESS 

2D SESSION H. R. 7527 

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 

JULY 9, 2020 

Miss GONZA ́LEZ-COLO ́N of Puerto Rico (for herself, Mr. SERRANO, Mr. 

BISHOP of Utah, Ms. SHALALA, Mr. KING of New York, and Mr. SOTO) 

introduced the following 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 consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To rescue domestic medical 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 Manufacturing in 

6 Economically Distressed Zones 

‘‘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. 

7 ‘‘SEC. 1400AA–1. MEDICAL MANUFACTURING IN ECONOMI8 CALLY 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 40 percent of the 

12 sum of— 

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

14 medical manufacturing economically distressed zone 

15 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 manufacturing facility 

21 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 of an employee by 

14 the taxpayer for the taxable year which are— 

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

17 and 

18 ‘‘(ii) the principal place of employ19 ment of whom is in a qualified medical 

20 manufacturing 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 under subparagraph (A) with respect to 


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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 EM7 PLOYEES, ETC.—If— 

8 ‘‘(I) any employee is not em9 ployed by the taxpayer on a substan10 tially full-time basis at all times dur11 ing the taxable year, or 

12 ‘‘(II) the principal place of em13 ployment of any employee is not with14 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 EMPLOY22 EES.—The term ‘economically distressed zone 

23 wages’ shall not include any wages paid to em24 ployees who are assigned by the employer to 

25 perform services for another person, unless the 


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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 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT

5 EXPENSES.— 

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

7 employee fringe benefit expenses’ means the ag8 gregate amount allowable as a deduction under 

9 this chapter to the taxpayer for the taxable year 

10 for the following amounts which are allocable to 

11 employment in a qualified medical manufac12 turing facility: 

13 ‘‘(i) Employer contributions under a 

14 stock bonus, pension, profit-sharing, or an15 nuity plan. 

16 ‘‘(ii) Employer-provided coverage 

17 under any accident or health plan for em18 ployees. 

19 ‘‘(iii) The cost of life or disability in20 surance provided to employees. 

21 ‘‘(B) ALLOCATION.—For purposes of sub22 paragraph (A), an amount shall be treated as 

23 allocable to a qualified medical manufacturing 

24 facility only if such amount is with respect to 

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1 vided, and the principal place of employment of 

2 whom is, in such facility. 

3 ‘‘(3) QUALIFIED MEDICAL MANUFACTURING FA4 CILITY.—The term ‘qualified medical manufacturing 

5 facility’ means any facility that— 

6 ‘‘(A) researches and develops or produces 

7 medical products, and 

8 ‘‘(B) is located within an economically dis9 tressed zone. 

10 ‘‘(4) QUALIFIED MEDICAL MANUFACTURING FA11 CILITY PROPERTY.—The term ‘qualified medical 

12 manufacturing facility property’ means any property 

13 used in (or consisting of) a qualified medical manu14 facturing facility if such property is directly con15 nected to the research, development, or production 

16 of a medical product. 

17 ‘‘(5) MEDICAL PRODUCT.—The term ‘medical 

18 product’ means— 

19 ‘‘(A) any prescription pharmaceutical 

20 which— 

21 ‘‘(i) is subject to regulation under— 

22 ‘‘(I) section 505 of the Federal 

23 Food, Drug, and Cosmetic Act (21 

24 U.S.C. 355), 


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1 ‘‘(II) section 802 of such Act (21 

2 U.S.C. 382), or 

3 ‘‘(III) section 351 of the Public 

4 Health Service Act (42 U.S.C. 262), 

5 or 

6 ‘‘(ii) is described in section 201(jj) of 

7 the Federal Food, Drug, and Cosmetic Act 

8 (21 U.S.C. 321(jj)), or 

9 ‘‘(B) any device (as that term is defined by 

10 section 201(h) of the Federal Food, Drug, and 

11 Cosmetic Act (21 U.S.C. 321(h))) or part 

12 thereof. 

13 ‘‘(6) AGGREGATION RULES.— 

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

15 section, members of an affiliated group shall be 

16 treated as a single taxpayer. 

17 ‘‘(B) AFFILIATED GROUP.—The term ‘af18 filiated group’ means an affiliated group (as de19 fined in section 1504(a), determined without re20 gard to section 1504(b)(3)) one or more mem21 bers of which are engaged in the active conduct 

22 of a trade or business within an economically 

23 distressed zone. 


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

2 ZONE PRODUCTS AND SERVICES ACQUIRED 

3 BY DOMESTIC MEDICAL MANUFACTURERS. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli5 gible medical manufacturer, there shall be allowed as a 

6 credit against the tax imposed by subtitle A for the taxable 

7 year an amount equal to the applicable percentage of the 

8 aggregate amounts paid or incurred by the taxpayer dur9 ing such taxable year for qualified economically distressed 

10 zone products or services. 

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

12 this section, the term applicable percentage means— 

13 ‘‘(1) 30 percent in the case of amounts paid or 

14 incurred to persons not described in paragraph (2) 

15 or (3), 

16 ‘‘(2) 40 percent in the case of amounts paid or 

17 incurred to an unrelated minority business, and 

18 ‘‘(3) 5 percent in the case of amounts paid or 

19 incurred to a related person. 

20 ‘‘(c) ELIGIBLE MEDICAL MANUFACTURER.—For 

21 purposes of this section, the term ‘eligible medical manu22 facturer’ means any person in the trade or business of pro23 ducing medical products in the United States. 

24 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur25 poses of this section, the term ‘qualified product or service’ 

26 means— 


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1 ‘‘(1) any product which is produced in an eco2 nomically distressed zone and which is integrated 

3 into a medical product produced by the taxpayer, 

4 and 

5 ‘‘(2) any service which is provided in an eco6 nomically distressed zone and which is necessary to 

7 the production of a medical product by the taxpayer 

8 (including packaging). 

9 ‘‘(e) MINORITY BUSINESS.—For purposes of this sec10 tion— 

11 ‘‘(1) IN GENERAL.—The term ‘minority busi12 ness’ means— 

13 ‘‘(A) a sole proprietorship carried on by a 

14 qualified individual, or 

15 ‘‘(B) a corporation or partnership— 

16 ‘‘(i) at least 50 percent of the owner17 ship interests in which are held by one or 

18 more qualified individuals, and 

19 ‘‘(ii) of which a qualified individual is 

20 the president or chief executive officer (or 

21 a substantially equivalent position). 

22 ‘‘(2) QUALIFIED INDIVIDUAL.—The term ‘quali23 fied individual’ means any individual who— 


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1 ‘‘(A) is of Asian-Indian, Asian-Pacific, 

2 Black, Hispanic, or Native American origin or 

3 descent, and 

4 ‘‘(B) is a United States citizen or legal 

5 resident of the United States or any of its terri6 tories or possessions. 

7 ‘‘(f) RELATED PERSONS.—For purposes of this sec8 tion, persons shall be treated as related to each other if 

9 such persons would be treated as a single employer under 

10 the regulations prescribed under section 52(b). 

11 ‘‘(g) OTHER TERMS.—Terms used in this section 

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

13 same meaning as when used in such section. 

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

15 SUPPLY CHAIN AND FOR THE PRODUCTION 

16 OF POPULATION HEALTH PRODUCTS. 

17 ‘‘(a) IN GENERAL.—In the case of a qualified repatri18 ated medical manufacturing facility or a qualified popu19 lation health product manufacturing facility— 

20 ‘‘(1) section 1400AA–1(a) shall be applied by 

21 substituting ‘60 percent’ for ‘40 percent’, and 

22 ‘‘(2) section 1400AA–2(a) shall be applied— 

23 ‘‘(A) by substituting ‘50 percent’ for ‘30 

24 percent’, and 


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1 ‘‘(B) by substituting ‘60 percent’ for ‘40 

2 percent’. 

3 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED4 IT FOR DEPRECIATION.—In the case of a taxpayer which 

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

6 may provide) the application of this subsection with re7 spect to any qualified repatriated medical manufacturing 

8 facility or qualified population health product manufac9 turing facility— 

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

11 with respect to any qualified medical manufacturing 

12 facility property with respect to such facility, and 

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

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

15 qualified property, and 

16 ‘‘(B) the applicable percentage with respect 

17 to such property shall be 100 percent. 

18 ‘‘(c) QUALIFIED REPATRIATED MEDICAL MANUFAC19 TURING FACILITY.—For purposes of this section, the term 

20 ‘qualified repatriated medical manufacturing facility’ 

21 means any qualified medical manufacturing facility (as de22 fined in section 1400AA–1) the production of which was 

23 moved to an economically distressed zone from a foreign 

24 country that the United States Trade Representative has 


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1 determined could pose a risk to the national supply chain 

2 because of political or social factors. 

3 ‘‘(d) QUALIFIED POPULATION HEALTH PRODUCT

4 MANUFACTURING FACILITY.—For purposes of this sec5 tion, the term ‘qualified population health product manu6 facturing facility’ means any qualified medical manufac7 turing facility (as defined in section 1400AA–1) that pro8 duces a population health product (as defined in section 

9 319L(a)(11) of the Public Health Service Act) which the 

10 Secretary of Health and Human Services has identified 

11 for support through a strategic initiative under section 

12 319L(c)(4)(F)(ii) of the Public Health Service Act. 

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) has pervasive poverty, unemployment, 

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1 nomic decline measured by real gross national 

2 product, 

3 ‘‘(B) has a poverty rate of not less than 30 

4 percent for each of the 5 most recent calendar 

5 years for which information is available, and 

6 ‘‘(C) has been designated as such by the 

7 Secretary and the Secretary of Commerce pur8 suant to an application under subsection (b). 

9 ‘‘(b) APPLICATION FOR DESIGNATION.— 

10 ‘‘(1) IN GENERAL.—An application for designa11 tion as an economically distressed zone may be filed 

12 by a State or local government in which the popu13 lation census tract to which the application applies 

14 is located. 

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

16 include a strategic plan for accomplishing the pur17 poses of this subchapter, which— 

18 ‘‘(A) describes the coordinated economic, 

19 human, community, and physical development 

20 plan and related activities proposed for the 

21 nominated area, 

22 ‘‘(B) describes the process by which the af23 fected community is a full partner in the proc24 ess of developing and implementing the plan 

25 and the extent to which local institutions and 


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1 organizations have contributed to the planning 

2 process, 

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

4 and private resources that will be available in 

5 the nominated area and the private/public part6 nerships to be used, which may include partici7 pation by, and cooperation with, universities, 

8 medical centers, and other private and public 

9 entities, 

10 ‘‘(D) identifies the funding requested 

11 under any Federal program in support of the 

12 proposed economic, human, community, and 

13 physical development and related activities, 

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

15 benchmarks for measuring the success of car16 rying out the strategic plan, including the ex17 tent to which poor persons and families will be 

18 empowered to become economically self-suffi19 cient, and 

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

21 any establishment in relocating from one area 

22 outside the nominated area to the nominated 

23 area, except that assistance for the expansion of 

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1 lishment of a new branch, affiliate, or sub2 sidiary is permitted if— 

3 ‘‘(i) the establishment of the new 

4 branch, affiliate, or subsidiary will not re5 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 clos12 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 ex15 isting business entity conducts business op16 eration, and 

17 ‘‘(iii) includes such other information 

18 as may be required by the Secretary and 

19 the Secretary of Commerce. 

20 ‘‘(c) PERIOD FOR WHICH DESIGNATIONS ARE IN EF21 FECT.—Designation as an economically distressed zone 

22 may be made at any time during the 10-year period begin23 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 year period beginning on the date of such designation. 


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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 pe4 riod beginning on such date. 

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

6 ‘United States’ includes the 50 States, the District of Co7 lumbia, and the territories and possessions of the United 

8 States. 

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

10 regulations or other guidance as may be necessary or ap11 propriate to carry out the purposes of this section, includ12 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) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2019. 

23 SEC. 3. AUTHORITY TO SUPPORT DEVELOPMENT OF POPU24 LATION HEALTH PRODUCTS. 

25 (a) DEFINITIONS.— 


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1 (1) QUALIFIED COUNTERMEASURE.—Subpara2 graph (A) of section 319F–1(a)(2) of the Public 

3 Health Service Act (42 U.S.C. 247d–6a(a)(2)) is 

4 amended to read as follows: 

5 ‘‘(A) QUALIFIED COUNTERMEASURE.—The 

6 term ‘qualified countermeasure’ means a drug 

7 (as that term is defined by section 201(g)(1) of 

8 the Federal Food, Drug, and Cosmetic Act (21 

9 U.S.C. 321(g)(1))), biological product (as that 

10 term is defined by section 351(i) of this Act (42 

11 U.S.C. 262(i))), or device (as that term is de12 fined by section 201(h) of the Federal Food, 

13 Drug, and Cosmetic Act (21 U.S.C. 321(h))), 

14 that the Secretary determines to be a priority 

15 consistent with sections 302(2) and 304(a) of 

16 the Homeland Security Act of 2002— 

17 ‘‘(i) to diagnose, mitigate, prevent, or 

18 treat harm from any biological agent (in19 cluding organisms that cause an infectious 

20 disease), toxin, chemical, radiological, or 

21 nuclear agent that may cause a public 

22 health emergency affecting national secu23 rity; or 

24 ‘‘(ii) to diagnose, mitigate, prevent, or 

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1 municable disease which, combined with 

2 pandemic influenza or an emerging infec3 tious disease, may result in adverse health 

4 consequences or serious threat to one or 

5 more vulnerable American populations (as 

6 defined in section 319L(a)) in an epidemic 

7 or pandemic.’’. 

8 (2) OTHER DEFINITIONS.—Subsection (a) of 

9 section 319L of the Public Health Service Act (42 

10 U.S.C. 247d–7e) is amended by adding at the end 

11 the following new paragraphs: 

12 ‘‘(11) POPULATION HEALTH PRODUCT.—The 

13 term ‘population health product’ means a widely 

14 available drug to diagnose, mitigate, prevent, or 

15 treat harm from an underlying non-communicable 

16 disease which, combined with pandemic influenza or 

17 an emerging infectious disease, may result in ad18 verse health consequences or a serious threat to one 

19 or more vulnerable American populations in an epi20 demic or pandemic. 

21 ‘‘(12) VULNERABLE AMERICAN POPU22 LATIONS.—The term ‘vulnerable American popu23 lations’ means children, pregnant women, older 

24 adults, minority populations, and other at-risk indi25 viduals with relevant characteristics that warrant 


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1 consideration during the process of researching and 

2 developing such countermeasures and products.’’. 

3 (b) STRATEGIC INITIATIVES.—Clause (ii) of section 

4 319L(c)(4)(F) of the Public Health Service Act (42 

5 U.S.C. 247d–7e(c)(4)(F)) is amended to read as follows: 

6 ‘‘(ii) threats that consistently exist or 

7 continually circulate and have a significant 

8 potential to become a pandemic, such as 

9 pandemic influenza and emerging infec10 tious diseases in combination with under11 lying non-communicable diseases, which 

12 may include the advanced research and de13 velopment, manufacturing, and appropriate 

14 stockpiling of qualified pandemic or epi15 demic products, and products, technologies, 

16 or processes to support the advanced re17 search and development of such counter18 measures (including multiuse platform 

19 technologies for diagnostics, vaccines, and 

20 therapeutics; virus seeds; clinical trial lots; 

21 novel virus strains; and antigen and adju22 vant material); and’’. 

23 (c) AT-RISK INDIVIDUALS.—Paragraph (6) of section 

24 319L(c) of the Public Health Service Act (42 U.S.C. 

25 247d–7e(c)) is amended to read as follows: 


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1 ‘‘(6) AT-RISK INDIVIDUALS.—In carrying out 

2 the functions under this section, the Secretary may 

3 give a priority to advanced research and develop4 ment of— 

5 ‘‘(A) qualified countermeasures and quali6 fied pandemic or epidemic products likely to be 

7 safe and effective with respect to vulnerable 

8 American populations; and 

9 ‘‘(B) population health products likely to 

10 protect vulnerable American populations with 

11 underlying non-communicable diseases from dis12 proportionate harm in epidemics and 

13 pandemics.’’. 

14 (d) OTHER AUTHORITIES.—Section 319L(c) of the 

15 Public Health Service Act (42 U.S.C. 247d–7e(c)) is 

16 amended by adding at the end the following: 

17 ‘‘(8) TIMELY DELIVERY OF POPULATION

18 HEALTH PRODUCTS TO AT-RISK INDIVIDUALS.—The 

19 Secretary shall collaborate with the Administrator of 

20 the Centers for Medicare & Medicaid Services, the 

21 Secretary of Defense, the Secretary of Veterans Af22 fairs, the Commissioner of Food and Drugs, and the 

23 heads of other Federal agencies involved with ap24 proval and distribution of health products to assure 

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1 ulation health products as promptly and effectively 

2 as possible, and as continuously as possible, to pro3 tect vulnerable American populations from harm in 

4 epidemics and pandemics. 

5 ‘‘(9) REPORT ON NEED FOR INCENTIVIZING DE6 VELOPMENT OF POPULATION HEALTH PRODUCTS.— 

7 Not later than 90 days after the date of enactment 

8 of the Medical Manufacturing, Economic Develop9 ment, and Sustainability Act of 2020, the Secretary 

10 shall examine and report to the Congress on— 

11 ‘‘(A) the extent to which the health of 

12 aging Americans, African Americans, His13 panics, Native Americans, veterans, or other 

14 vulnerable American populations has been dis15 proportionately harmed by the COVID–19 pan16 demic and prior epidemics and pandemics; 

17 ‘‘(B) the population health products cur18 rently available and whether there is a need for 

19 additional innovation and development to 

20 produce population health products to reduce 

21 the exposure of vulnerable American popu22 lations to risk of disproportionate harm in 

23 epidemics and pandemics; and 

24 ‘‘(C) whether the Secretary recommends 

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1 ment and marketing of population health prod2 ucts as is given with respect to covered infec3 tious disease products under the Federal Food, 

4 Drug, and Cosmetic Act, including under sec5 tion 505E of such Act.’’. 

Æ 


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