II 

117TH CONGRESS 

1ST SESSION S. 2082 

To mitigate drug shortages and provide incentives for maintaining, expanding, 

and relocating the manufacturing of active pharmaceutical ingredients, 

excipients, medical diagnostic devices, pharmaceuticals, and personal protective equipment in the United States, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 16, 2021 

Mr. SCOTT of South Carolina (for himself and Ms. ROSEN) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To mitigate drug shortages and provide incentives for maintaining, expanding, and relocating the manufacturing of 

active pharmaceutical ingredients, excipients, medical diagnostic devices, pharmaceuticals, and personal protective equipment in the United States, and for other purposes. 

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 ‘‘Manufacturing API, 

5 Drugs, and Excipients in America Act’’ or the ‘‘MADE 

6 in America Act’’. 


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1 SEC. 2. TABLE OF CONTENTS. 

2 The table of contents of this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

TITLE I—HEALTH PROVISIONS 

Sec. 101. Report to Congress on barriers to domestic manufacturing of medical 

products. 

Sec. 102. Enhance intra-agency coordination and public health assessment with 

regard to compliance activities. 

Sec. 103. Reporting of mutual recognition agreements for inspections and review activities. 

Sec. 104. Enhancing transparency of drug facility inspection timelines. 

Sec. 105. Advanced manufacturing technologies program. 

TITLE II—TAX INCENTIVES TO INCREASE DOMESTIC 

PHARMACEUTICAL AND MEDICAL DEVICE PRODUCTION 

Sec. 201. Credit for pharmaceutical and medical device production activities in 

distressed zones. 

3 TITLE I—HEALTH PROVISIONS 

4 SEC. 101. REPORT TO CONGRESS ON BARRIERS TO DOMES5 TIC MANUFACTURING OF MEDICAL PROD6 UCTS. 

7 (a) REPORT.—Not later than 6 months after the date 

8 of enactment of this Act, the Secretary of Health and 

9 Human Services, the Secretary of the Treasury, the Sec10 retary of Commerce, and the United States Trade Rep11 resentative (collectively referred to in this section as the 

12 ‘‘Secretaries’’) shall submit to the Committee on Health, 

13 Education, Labor, and Pensions of the Senate and the 

14 Committee on Energy and Commerce of the House of 

15 Representatives a report on barriers to domestic manufac16 turing of active pharmaceutical ingredients, finished drug 


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1 products, and devices that are imported from outside of 

2 the United States. 

3 (b) CONTENTS.—Such report shall— 

4 (1) identify factors that limit or otherwise dis5 courage the domestic manufacturing of active phar6 maceutical ingredients, drugs, and devices that are 

7 currently imported from outside of the United 

8 States, including any Federal, State, local, or Tribal 

9 laws that hinder domestic manufacturing opportuni10 ties; and 

11 (2) recommend specific strategies to overcome 

12 the challenges identified under paragraph (1), in13 cluding strategies— 

14 (A) to develop effective incentives for do15 mestic manufacturing; and 

16 (B) to make changes to laws or regulations 

17 that hinder domestic manufacturing opportuni18 ties. 

19 (c) CONSULTATION.—In preparing the report under 

20 subsection (a), the Secretaries shall consult with— 

21 (1) the Food and Drug Administration, the 

22 Centers for Medicare & Medicaid Services, the De23 partment of Defense, the Department of State, the 

24 Department of Veterans Affairs, the Department of 


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1 Justice, and any other Federal agencies as appro2 priate; and 

3 (2) relevant stakeholders, including drug, de4 vice, and active pharmaceutical ingredient manufac5 turers, and other entities, as appropriate. 

6 (d) DEFINITION.—In this section, the term ‘‘active 

7 pharmaceutical ingredient’’ has the meaning given to such 

8 term in section 207.1 of title 21, Code of Federal Regula9 tions (or any successor regulations). 

10 (e) PUBLICATION.—The Secretary shall make the re11 port under subsection (a) available on the public website 

12 of the Department of Health and Human Services. 

13 SEC. 102. ENHANCE INTRA-AGENCY COORDINATION AND 

14 PUBLIC HEALTH ASSESSMENT WITH REGARD 

15 TO COMPLIANCE ACTIVITIES. 

16 (a) COORDINATION.—Section 506D of the Federal 

17 Food, Drug, and Cosmetic Act (21 U.S.C. 356d) is 

18 amended by adding at the end the following: 

19 ‘‘(g) COORDINATION.—The Secretary shall ensure 

20 timely and effective internal coordination and alignment 

21 among the field investigators of the Food and Drug Ad22 ministration and the staff of the Center for Drug Evalua23 tion and Research’s Office of Compliance and Drug Short24 age Program regarding the reviews of reports shared purVerDate Sep 11 2014 00:40 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2082.IS S2082

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1 suant to section 704(b)(2), and any feedback or corrective 

2 or preventive actions in response to such reports.’’. 

3 (b) REPORTING.—Section 506C–1(a)(2) of the Fed4 eral Food, Drug, and Cosmetic Act (21 U.S.C. 356c– 

5 1(a)(2)) is amended to read as follows: 

6 ‘‘(2)(A) describes the communication between 

7 the field investigators of the Food and Drug Admin8 istration and the staff of the Center for Drug Eval9 uation and Research’s Office of Compliance and 

10 Drug Shortage Program, including the Food and 

11 Drug Administration’s procedures for enabling and 

12 ensuring such communication; 

13 ‘‘(B) provides the number of reports described 

14 in section 704(b)(2) that were required to be sent to 

15 the appropriate offices of the Food and Drug Ad16 ministration with expertise regarding drug shortage 

17 and the number of such reports that were sent; and 

18 ‘‘(C) describes the adoption and utilization of 

19 the approach described in section 506D(g);’’. 

20 (c) APPLICABILITY.— 

21 (1) SUBSECTION (a).—The amendment made 

22 by subsection (a) shall apply beginning on the date 

23 of enactment of this Act. 

24 (2) SUBSECTION (b).—The amendment made 

25 by subsection (b) shall apply beginning on the date 


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1 that is 1 year after the date of enactment of this 

2 Act. 

3 SEC. 103. REPORTING OF MUTUAL RECOGNITION AGREE4 MENTS FOR INSPECTIONS AND REVIEW AC5 TIVITIES. 

6 (a) IN GENERAL.—Not later than the end of calendar 

7 year 2020, and annually thereafter, the Secretary of 

8 Health and Human Services (referred to in this section 

9 as the ‘‘Secretary’’) shall publish a report on the public 

10 website of the Food and Drug Administration on the utili11 zation of agreements entered into pursuant to section 809 

12 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

13 384e) or otherwise entered into by the Secretary to recog14 nize inspections between drug regulatory authorities 

15 across countries and international regions with analogous 

16 review criteria to the Food and Drug Administration, such 

17 as the Pharmaceutical Inspection Co-Operation Scheme, 

18 the Mutual Recognition Agreement with the European 

19 Union, and the Australia-Canada-Singapore-Switzerland 

20 Consortium, in the previous fiscal year. 

21 (b) CONTENT.—The report under subsection (a) shall 

22 include each of the following: 

23 (1) The total number of establishments that are 

24 registered under section 510(i) of the Federal Food, 

25 Drug, and Cosmetic Act (21 U.S.C. 360(i)), and of 


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1 such establishments, the number in each region of 

2 interest. 

3 (2) The total number of inspections conducted 

4 as described in subparagraphs (A) and (B) of para5 graph (5) at establishments described in paragraph 

6 (1). 

7 (3) Of the inspections described in paragraph 

8 (2), the total number of inspections in each of region 

9 of interest. 

10 (4) Of the inspections in each region of interest 

11 reported pursuant to paragraph (3), the number of 

12 inspections in each FDA inspection category. 

13 (5) Of the number of inspections reported 

14 under each of paragraphs (3) and (4)— 

15 (A) the number of inspections which have 

16 been conducted pursuant to an agreement or 

17 other recognition described in subsection (a); 

18 and 

19 (B) the number of inspections which have 

20 been conducted by employees or contractors of 

21 the Food and Drug Administration. 

22 (c) DEFINITIONS.—In this subsection: 

23 (1) FDA INSPECTION CATEGORY.—The term 

24 ‘‘FDA inspection category’’ means the following in25 spection categories: 


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1 (A) Inspections to support approvals of 

2 changes to the manufacturing process of drugs 

3 approved under section 505 of the Federal 

4 Food, Drug, and Cosmetic Act (21 U.S.C. 355) 

5 or section 351 of the Public Health Service Act 

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

7 (B) Good manufacturing practice surveil8 lance inspections. 

9 (C) For-cause inspections. 

10 (2) REGION OF INTEREST.—The term ‘‘region 

11 of interest’’ means China, India, the European 

12 Union, and any other geographic region as the Sec13 retary determines appropriate. 

14 SEC. 104. ENHANCING TRANSPARENCY OF DRUG FACILITY 

15 INSPECTION TIMELINES. 

16 Section 902 of the FDA Reauthorization Act of 2017 

17 (21 U.S.C. 355 note) is amended to read as follows: 

18 ‘‘SEC. 902. ANNUAL REPORT ON INSPECTIONS. 

19 ‘‘Not later than March 1 of each year, the Secretary 

20 of Health and Human Services shall post on the public 

21 website of the Food and Drug Administration information 

22 related to inspections of facilities, including inspections 

23 that are necessary for approval of a drug under subsection 

24 (c) or (j) of section 505 of the Federal Food, Drug, and 

25 Cosmetic Act (21 U.S.C. 355), approval of a device under 


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1 section 515 of such Act (21 U.S.C. 360e), or clearance 

2 of a device under section 510(k) of such Act (21 U.S.C. 

3 360(k)) that were conducted during the previous calendar 

4 year. Such information shall include the following: 

5 ‘‘(1) The median time following a request from 

6 staff of the Food and Drug Administration review7 ing an application or report to the beginning of the 

8 inspection, including— 

9 ‘‘(A) the median time for drugs described 

10 in section 505(j)(11)(A)(i) of the Federal Food, 

11 Drug, and Cosmetic Act (21 U.S.C. 

12 355(j)(11)(A)(i)); 

13 ‘‘(B) the median time for drugs described 

14 in section 506C(a) of such Act (21 U.S.C. 

15 356c(a)) only; and 

16 ‘‘(C) the median time for drugs on the 

17 drug shortage list in effect under section 506E 

18 of such Act (21 U.S.C. 356f). 

19 ‘‘(2) The median time from the issuance of a 

20 report pursuant to section 704(b) of such Act (21 

21 U.S.C. 374(b)) to the sending of a warning letter, 

22 issuance of an import alert, or holding of a regu23 latory meeting for inspections for which the Sec24 retary concluded that regulatory or enforcement ac25 tion was indicated, including the median time for 


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1 each category of drugs listed in subparagraphs (A) 

2 through (C) of paragraph (1). 

3 ‘‘(3) The median time from the sending of a 

4 warning letter, issuance of an import alert, or hold5 ing of a regulatory meeting to resolution of the ac6 tions indicated to address the conditions or practices 

7 observed during an inspection. 

8 ‘‘(4) The number of facilities that were unable 

9 to implement requested corrective or preventive ac10 tions following a report pursuant to such section 

11 704(b), resulting in a withhold recommendation, in12 cluding the number of such times for each category 

13 of drugs listed in subparagraphs (A) through (C) of 

14 paragraph (1).’’. 

15 SEC. 105. ADVANCED MANUFACTURING TECHNOLOGIES 

16 PROGRAM. 

17 Subchapter A of chapter V of the Federal Food, 

18 Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amend19 ed by adding at the end the following: 

20 ‘‘SEC. 524B. ADVANCED MANUFACTURING TECHNOLOGIES 

21 PROGRAM. 

22 ‘‘(a) IN GENERAL.—Not later than 1 year after the 

23 date of enactment of the Manufacturing API, Drugs, and 

24 Excipients in America Act, the Secretary shall continue 

25 in effect the programs to facilitate the development and 


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1 review of an application under subsection (b) or (j) of sec2 tion 505 of this Act or subsection (a) or (k) of section 

3 351 of the Public Health Service Act for a drug or biologi4 cal product that is manufactured using one of more ad5 vanced manufacturing technologies that have been des6 ignated in accordance with subsection (b). 

7 ‘‘(b) DESIGNATION.—The Secretary shall designate a 

8 method of manufacturing or development of a drug or bio9 logical product as an advanced manufacturing technology 

10 under this section if it incorporates a novel technology or 

11 uses an established technique or technology in a novel way 

12 that— 

13 ‘‘(1) enhances drug quality; or 

14 ‘‘(2) improves the flexibility, robustness, or effi15 ciency of the manufacturing process to— 

16 ‘‘(A) prevent or resolve a drug shortage; 

17 ‘‘(B) reduce premarket development time; 

18 or 

19 ‘‘(C) increase the supply of drugs described 

20 in paragraph (1) or (2) of section 506C(a) for 

21 national emergencies. 

22 ‘‘(c) CONSULTATION.—If the Secretary designates a 

23 method of manufacturing as an advanced manufacturing 

24 technology under this section, the Secretary shall take ac25 tions to expedite the development and implementation of 


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1 such method of manufacture for purposes of approval of 

2 an application under subsection (c) or (j) of section 505 

3 of this Act or subsection (a) or (k) of section 351 of the 

4 Public Health Service Act, which may include, as appro5 priate, holding meetings between the sponsor of the appli6 cation and appropriate Food and Drug Administration 

7 staff throughout the development of the drug of biological 

8 product using such advanced manufacturing technology. 

9 ‘‘(d) EVALUATION OF AN ADVANCED MANUFAC10 TURING TECHNOLOGY.— 

11 ‘‘(1) PACKAGE.—A person who seeks designa12 tion of an advanced manufacturing technology under 

13 this section shall submit to the Secretary a package 

14 of scientific evidence supporting the implementation 

15 of the advanced manufacturing technology in a par16 ticular context-of-use. The Secretary shall assist 

17 with the development of such package by— 

18 ‘‘(A) providing timely advice to, and inter19 active communication with, the sponsor regard20 ing the development of the technology; and 

21 ‘‘(B) involving senior managers and experi22 enced staff of the Food and Drug Administra23 tion, as appropriate, in a collaborative, cross24 disciplinary review of the method of manufac25 turing. 


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1 ‘‘(2) EVALUATION.—Within 90 days of receiv2 ing a package under paragraph (1), the Secretary 

3 shall determine whether a designated advanced man4 ufacturing technology is validated for the proposed 

5 context of use based on the scientific merit the sup6 porting evidence provided by the sponsor. 

7 ‘‘(3) EFFECT OF DESIGNATION.—Upon des8 ignation of an advanced manufacturing technology, 

9 the holder of the advanced manufacturing technology 

10 designation, or a person the advanced manufac11 turing technology designation holder authorizes, may 

12 rely upon the advanced manufacturing technology 

13 for use across multiple manufacturing or product 

14 lines within the same context-of-use without having 

15 to re-submit data to the Secretary validating the un16 derlying technology. 

17 ‘‘(e) IMPLEMENTATION AND REPORTING.— 

18 ‘‘(1) PUBLIC MEETING.—The Secretary shall 

19 publish in the Federal Register a notice of a public 

20 meeting, to be held not later than 1 year after the 

21 date of enactment of the Manufacturing API, 

22 Drugs, and Excipients in America Act, to discuss 

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1 able framework and procedures and requirements 

2 for, the program under this section. 

3 ‘‘(2) PROGRAM GUIDANCE.—The Secretary 

4 shall— 

5 ‘‘(A) not later than 1 year after the date 

6 of enactment of the Manufacturing API, Drugs, 

7 and Excipients in America Act, issue draft 

8 guidance regarding the goals and implementa9 tion of the program under this section; and 

10 ‘‘(B) not later than 2 years after the date 

11 of enactment of the Manufacturing API, Drugs, 

12 and Excipients in America Act, issue final guid13 ance with respect to the implementation of such 

14 program. 

15 ‘‘(3) REPORT.—The Secretary shall make avail16 able on the public website of the Food and Drug Ad17 ministration an annual report on the progress of the 

18 programs under this section.’’. 


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1 TITLE II—TAX INCENTIVES TO 

2 INCREASE DOMESTIC PHAR3 MACEUTICAL AND MEDICAL 

4 DEVICE PRODUCTION 

5 SEC. 201. CREDIT FOR PHARMACEUTICAL AND MEDICAL 

6 DEVICE PRODUCTION ACTIVITIES IN DIS7 TRESSED ZONES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 is amended by adding at the end the following new 

11 section: 

12 ‘‘SEC. 45U. DISTRESSED ZONE PHARMACEUTICAL AND MED13 ICAL DEVICE PRODUCTION CREDIT. 

14 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

15 distressed zone pharmaceutical and medical device produc16 tion credit for the taxable year shall be an amount equal 

17 to the applicable percentage of the qualified production ac18 tivity expenditures of the taxpayer for the taxable year. 

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

20 this section— 

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), the term ‘applicable percentage’ means 

23 25 percent. 

24 ‘‘(2) INCREASED AMOUNT WHERE EMPLOYEES

25 RESIDE IN DISTRESSED ZONE.—In the case of any 


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1 qualified pharmaceutical or medical device produc2 tion business a substantial portion of the employees 

3 of which reside in a distressed zone, the applicable 

4 percentage shall be 30 percent. 

5 ‘‘(c) QUALIFIED PRODUCTION ACTIVITY EXPENDI6 TURES.—For purposes of this section— 

7 ‘‘(1) IN GENERAL.—The term ‘qualified produc8 tion activity expenditures’ means— 

9 ‘‘(A) wages paid or incurred to an em10 ployee of the taxpayer for services performed by 

11 such employee in the conduct of a qualified 

12 pharmaceutical or diagnostic medical device 

13 production business in a distressed zone (but 

14 only if the employee’s principal place of employ15 ment is in a distressed zone), and 

16 ‘‘(B) qualified pharmaceutical or medical 

17 device production expenditures. 

18 ‘‘(2) QUALIFIED PHARMACEUTICAL OR MEDICAL

19 DEVICE PRODUCTION BUSINESS.— 

20 ‘‘(A) IN GENERAL.—The term ‘qualified 

21 pharmaceutical or medical device production 

22 business’ means the trade or business of pro23 ducing qualified pharmaceuticals in commercial 

24 quantities. 

25 ‘‘(B) QUALIFIED PHARMACEUTICALS.— 


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1 ‘‘(i) IN GENERAL.—The term ‘quali2 fied pharmaceuticals’ means pharma3 ceuticals, active pharmaceutical ingredi4 ents, excipients, medical diagnostic devices, 

5 or personal protective equipment. 

6 ‘‘(ii) PHARMACEUTICAL.—The term 

7 ‘pharmaceuticals’— 

8 ‘‘(I) means any drug (as defined 

9 in section 201 of the Federal Food, 

10 Drug, and Cosmetic Act); and 

11 ‘‘(II) includes a biological prod12 uct (as defined in section 351 of the 

13 Public Health Service Act). 

14 ‘‘(iii) ACTIVE PHARMACEUTICAL IN15 GREDIENT.—The term ‘active pharma16 ceutical ingredients’ has the meaning given 

17 to such term in section 207.1 of title 21, 

18 Code of Federal Regulations (or any suc19 cessor regulations). 

20 ‘‘(iv) EXCIPIENT.—The term ‘excip21 ient’— 

22 ‘‘(I) means any inactive ingre23 dient that is intentionally added to a 

24 pharmaceutical that is not intended to 

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1 tended dosage, other than by acting to 

2 improve product delivery; and 

3 ‘‘(II) includes any such filler, ex4 tenders, diluent, wetting agent, sol5 vent, emulsifier, preservative, flavor, 

6 absorption enhancer, sustained release 

7 matrix, and coloring agent. 

8 ‘‘(v) MEDICAL DIAGNOSTIC DEVICE.— 

9 The term ‘medical diagnostic device’ means 

10 any device (as defined in section 201(h) of 

11 the Federal Food, Drug, and Cosmetic 

12 Act) intended for use in the diagnosis of 

13 disease or other conditions. 

14 ‘‘(vi) PERSONAL PROTECTIVE EQUIP15 MENT.—The term ‘personal protective 

16 equipment’ means— 

17 ‘‘(I) any device (as defined in 

18 section 201(h) of the Federal Food, 

19 Drug, and Cosmetic Act) that is a 

20 face mask, filtering facepiece res21 pirator, face shield, surgical mask, 

22 gown, other apparel, or glove that is 

23 intended for a medical purpose; and 

24 ‘‘(II) any particulate filtering air 

25 purifying respiratory protective device 


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1 that is approved by the National In2 stitute for Occupational Safety and 

3 Health under part 84 of title 42, Code 

4 of Federal Regulations (or successor 

5 regulations). 

6 ‘‘(3) CERTAIN HEALTH PLAN EXPENSES TREAT7 ED AS WAGES.— 

8 ‘‘(A) IN GENERAL.—The term ‘wages’ 

9 shall include so much of the eligible employer’s 

10 qualified health plan expenses as are properly 

11 allocable to such wages. 

12 ‘‘(B) QUALIFIED HEALTH PLAN EX13 PENSES.—For purposes of this paragraph, the 

14 term ‘qualified health plan expenses’ means 

15 amounts paid or incurred by the eligible em16 ployer to provide and maintain a group health 

17 plan (as defined in section 5000(b)(1)), but 

18 only to the extent that such amounts are ex19 cluded from the gross income of employees by 

20 reason of section 106(a) of such Code. 

21 ‘‘(C) ALLOCATION RULES.—For purposes 

22 of this paragraph, qualified health plan ex23 penses shall be allocated to qualified wages in 

24 such manner as the Secretary may prescribe. 

25 Except as otherwise provided by the Secretary, 


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1 such allocation shall be treated as properly 

2 made if made on the basis of being pro rata 

3 among employees and pro rata on the basis of 

4 periods of coverage (relative to the periods to 

5 which such wages relate). 

6 ‘‘(4) QUALIFIED PHARMACEUTICAL OR MEDICAL

7 DEVICE PRODUCTION EXPENDITURES.— 

8 ‘‘(A) DEFINITION.—The term ‘qualified 

9 pharmaceutical or medical device production ex10 penditures’ means amount paid or incurred 

11 (whether or not chargeable to capital account) 

12 for qualified property used in the conduct of a 

13 qualified pharmaceutical or medical device pro14 duction business in a distressed zone (but only 

15 if the primary use of such property is in a dis16 tressed zone). 

17 ‘‘(B) QUALIFIED PROPERTY.— 

18 ‘‘(i) IN GENERAL.—The term ‘quali19 fied property’ means any tangible personal 

20 property (other than a building or its 

21 structural components) used in the conduct 

22 of a qualified pharmaceutical or medical 

23 device production business in a distressed 

24 zone (but only if the primary use of such 

25 property is in a distressed zone). 


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1 ‘‘(ii) EXCEPTION.—Such term shall 

2 not include any property described in sec3 tion 50(b) (determined as if the United 

4 States included Puerto Rico). 

5 ‘‘(d) DISTRESSED ZONE.—For purposes of this sec6 tion, the term ‘distressed zone’ means a population census 

7 tract— 

8 ‘‘(1) which has been designated as a qualified 

9 opportunity zone under section 1400Z–1, and 

10 ‘‘(2) which has a poverty rate in excess of 30 

11 percent for the calendar year prior to the calendar 

12 year that includes the date of enactment of this sec13 tion. 

14 ‘‘(e) SPECIAL RULES.— 

15 ‘‘(1) APPLICATION TO UNITED STATES SHARE16 HOLDERS OF CONTROLLED FOREIGN CORPORA17 TIONS.— 

18 ‘‘(A) IN GENERAL.—In the case of a do19 mestic corporation that is a United States 

20 shareholder of a qualified controlled foreign cor21 poration, the credit under subsection (a) (deter22 mined without regard to this paragraph) shall 

23 be increased by an amount equal to 30 percent 

24 of the corporation’s pro rata share (determined 

25 under rules similar to the rules of section 


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1 951(a)(2)) of qualified production activity ex2 penditures of such controlled foreign corpora3 tion for the taxable year of the qualified con4 trolled foreign corporation ending with or with5 in the taxable year of the domestic corporation. 

6 ‘‘(B) QUALIFIED CORPORATION.—For pur7 poses of subparagraph (A), the term ‘qualified 

8 controlled foreign corporation’ means, for any 

9 taxable year, a controlled foreign corporation 

10 which does not have gross income that is effec11 tively connected with the conduct of a trade or 

12 business within the United States for such tax13 able year . 

14 ‘‘(2) REDUCTION IN BASIS.—If a credit is de15 termined under this section with respect to any 

16 property by reason of any qualified production activ17 ity expenditures described in subsection (b)(1)(B), 

18 the basis of such property shall be reduced by the 

19 amount of the credit so determined. 

20 ‘‘(3) COORDINATION WITH OTHER CREDITS.— 

21 Any qualified production activity expenditures taken 

22 into account in determining the amount of the credit 

23 under subsection (a) shall not be taken into account 

24 in determining a credit under any other provision of 

25 this chapter. 


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1 ‘‘(f) RECAPTURE.— 

2 ‘‘(1) IN GENERAL.—If, during any taxable year, 

3 property take into account under subsection 

4 (c)(1)(B) is disposed of, or otherwise ceases to be 

5 used by the taxpayer in the active trade or business 

6 of producing qualified pharmaceuticals in commer7 cial quantities, before the close of the recapture pe8 riod, then the tax under this chapter for such tax9 able year shall be increased by the recapture per10 centage of the aggregate decrease in the credits al11 lowed under section 38 for all prior taxable years 

12 which would have resulted solely from reducing to 

13 zero any credit determined under this section with 

14 respect to such property. 

15 ‘‘(2) RECAPTURE PERCENTAGE.—For purposes 

16 of subparagraph (A), the recapture percentage shall 

17 be determined in the same manner as under section 

18 50(a)(1)(B). 

19 ‘‘(3) APPLICATION TO UNITED STATES SHARE20 HOLDERS.—In the case of any taxpayer to whom a 

21 credit is allowed by reason of subsection (e)(1), 

22 paragraph (1) shall be applied by substituting ‘the 

23 controlled foreign corporation with respect to which 

24 the taxpayer is a United States shareholder’ for ‘the 

25 taxpayer’. 


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1 ‘‘(4) APPLICATION OF OTHER RULES.—For 

2 purposes of this paragraph, rules similar to the rules 

3 of paragraphs (3), (4), and (5) (other than subpara4 graph (A) thereof) of section 50(a)(1) shall apply.’’. 

5 (b) CREDIT ALLOWED AGAINST ALTERNATIVE MIN6 IMUM TAX.—Section 38(c)(4)(B) of such Code is amended 

7 by redesignating clauses (x), (xi), and (xii) as clauses (xi), 

8 (xii), and (xiii), respectively, and by inserting after clause 

9 (ix) the following new clause: 

10 ‘‘(x) the credit determined under sec11 tion 45U,’’. 

12 (c) CREDIT ALLOWED AGAINST BASE EROSION

13 ANTI-ABUSE TAX.—Section 59A(b)(1)(B)(ii) of such 

14 Code is amended by striking ‘‘plus’’ at the end of sub15 clause (I), by redesignating subclause (II) as subclause 

16 (III), and by inserting after subclause (I) (as so amended) 

17 the following new subclause: 

18 ‘‘(II) the credit allowed under 

19 section 38 for the taxable year which 

20 is properly allocable to the distressed 

21 zone pharmaceutical and medical de22 vice production credit determined 

23 under section 45U(a), plus’’. 


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•S 2082 IS

1 (d) DENIAL OF DEDUCTION.—Section 280C of such 

2 Code is amended by adding at the end the following new 

3 subsection: 

4 ‘‘(i) DISTRESSED ZONE PHARMACEUTICAL AND

5 MEDICAL DEVICE PRODUCTION CREDIT.—No deduction 

6 shall be allowed for that portion of the qualified produc7 tion activity expenditures (as defined in section 45U(b)) 

8 otherwise allowable as a deduction for the taxable year 

9 which is equal to the amount of the distressed zone phar10 maceutical and medical device production credit deter11 mined for such taxable year under section 45U(a).’’. 

12 (e) PART OF GENERAL BUSINESS CREDIT.—Section 

13 38(b) of such Code is amended by striking ‘‘plus’’ at the 

14 end of paragraph (32), by striking the period at the end 

15 of paragraph (33) and inserting ‘‘, plus’’, and by adding 

16 at the end the following new paragraph: 

17 ‘‘(34) the distressed zone pharmaceutical and 

18 medical device production credit determined under 

19 section 45U(a).’’. 

20 (f) CLERICAL AMENDMENT.—The table of sections 

21 for subpart D of part IV of subchapter A of chapter 1 

22 is amended by adding at the end the following new item: 

‘‘Sec. 45U. Distressed zone pharmaceutical and medical device production credit.’’. 


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•S 2082 IS

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

2 this section shall apply to amounts paid or incurred after 

3 the date of the enactment of this Act. 

Æ 


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