I 

118TH CONGRESS 

1ST SESSION H. R. 6109 

To amend the Internal Revenue Code of 1986 to establish the generic drugs 

and biosimilars production credit, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 26, 2023 

Ms. TENNEY introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

the generic drugs and biosimilars production credit, 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 ‘‘Producing Incentives 

5 for Long-term production of Lifesaving Supply of Medi6 cine Act’’ or the ‘‘PILLS Act’’. 

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1 SEC. 2. GENERIC DRUGS AND BIOSIMILARS PRODUCTION 

2 CREDIT. 

3 (a) IN GENERAL.—Subpart D of part IV of chapter 

4 A of chapter 1 of the Internal Revenue Code of 1986 

5 amended by adding at the end the following new section: 

6 ‘‘SEC. 45BB. GENERIC DRUGS AND BIOSIMILARS PRODUC7 TION CREDIT. 

8 ‘‘(a) IN GENERAL.— 

9 ‘‘(1) ALLOWANCE OF CREDIT.—For purposes of 

10 section 38, the generic drugs and biosimilars produc11 tion credit for any taxable year is an amount equal 

12 to the credit amount determined under subsection 

13 (b) with respect to each eligible component which 

14 is— 

15 ‘‘(A) produced by the taxpayer in the 

16 United States, and 

17 ‘‘(B) sold by such taxpayer to an unrelated 

18 person during the taxable year. 

19 ‘‘(2) PRODUCTION AND SALE MUST BE IN

20 TRADE OR BUSINESS; UNRELATED PERSON.—Rules 

21 similar to the rules of paragraphs (2) and (3) of sec22 tion 45X(a) shall apply. 

23 ‘‘(3) DISALLOWANCE OF CREDIT.—The credit 

24 under this subsection shall not be allowed to any 

25 taxpayer which, at any time during the taxable year, 

26 was a foreign entity of concern (as defined in section 

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1 9901(8) of the William M. (Mac) Thornberry Na2 tional Defense Authorization Act for Fiscal Year 

3 2021 (15 U.S.C. 4651)). 

4 ‘‘(b) CREDIT AMOUNT.— 

5 ‘‘(1) IN GENERAL.—Subject to paragraph (4), 

6 the amount determined under this subsection with 

7 respect to any eligible component shall be an amount 

8 equal to— 

9 ‘‘(A) the value added to such component 

10 by the taxpayer, multiplied by 

11 ‘‘(B) the base credit percentage. 

12 ‘‘(2) VALUE ADDED.—The value added to a 

13 component by a taxpayer is an amount equal to— 

14 ‘‘(A) the gross receipts received by the tax15 payer from the sale of the eligible component, 

16 minus 

17 ‘‘(B) the cost of eligible components pur18 chased from an unrelated person in connection 

19 with the production of the component by the 

20 taxpayer. 

21 ‘‘(3) BASE CREDIT PERCENTAGE.— 

22 ‘‘(A) IN GENERAL.—Except as provided in 

23 subparagraphs (B) and (C), the base credit per24 centage shall be 30 percent. 

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1 ‘‘(B) INCREASED BASE CREDIT PERCENT2 AGE FOR CERTAIN ELIGIBLE COMPONENTS.— 

3 The base credit percentage shall be 35 percent 

4 in the case of the final production of— 

5 ‘‘(i) a drug substance, 

6 ‘‘(ii) a drug product, or 

7 ‘‘(iii) a biological product. 

8 ‘‘(C) DOMESTIC CONTENT BONUS CRED9 IT.— 

10 ‘‘(i) IN GENERAL.—In the case of an 

11 eligible component which contains domestic 

12 content, the base credit percentage deter13 mined under this paragraph (determined 

14 without regard to this subparagraph) shall 

15 be increased by an amount equal to— 

16 ‘‘(I) the domestic content per17 centage, multiplied by 

18 ‘‘(II) 0.20. 

19 ‘‘(ii) DOMESTIC CONTENT PERCENT20 AGE.—For purposes of this paragraph, the 

21 term ‘domestic content percentage’ means 

22 the percentage of the total cost of the bill 

23 of materials of the eligible component that 

24 is attributable to materials and compoVerDate Sep 11 2014 20:21 Oct 28, 2023 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6109.IH H6109
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1 nents that were produced in the United 

2 States. 

3 ‘‘(iii) DOCUMENTATION RULES.— 

4 ‘‘(I) RECORDKEEPING.—No do5 mestic content bonus credit shall be 

6 determined under this subparagraph 

7 unless the taxpayer provides docu8 mentation supporting the domestic 

9 content percentage (in such form and 

10 manner as the Secretary shall pre11 scribe). 

12 ‘‘(II) CERTIFICATION BY UNRE13 LATED PARTY.—In the case of mate14 rials or components provided to the 

15 taxpayer by an unrelated party, the 

16 Secretary shall accept certification (in 

17 such form and manner as the Sec18 retary shall prescribe) by such unre19 lated party that the materials or com20 ponents were produced in the United 

21 States. 

22 ‘‘(4) PHASEOUT.— 

23 ‘‘(A) IN GENERAL.—In the case of any eli24 gible component sold after December 31, 2029, 

25 the amount determined under this subsection 

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1 with respect to such component shall be equal 

2 to the product of— 

3 ‘‘(i) the amount determined under 

4 paragraph (1) with respect to such compo5 nent (determined without regard to this 

6 paragraph after the application of para7 graphs (2) and (3)), multiplied by 

8 ‘‘(ii) the phaseout percentage under 

9 subparagraph (B). 

10 ‘‘(B) PHASEOUT PERCENTAGE.—The 

11 phase out percentage under this subparagraph 

12 is equal to— 

13 ‘‘(i) in the case of an eligible compo14 nent sold during calendar year 2030, 75 

15 percent, 

16 ‘‘(ii) in the case of an eligible compo17 nent sold during calendar year 2031, 50 

18 percent, 

19 ‘‘(iii) in the case of an eligible compo20 nent sold during calendar year 2032, 25 

21 percent, 

22 ‘‘(iv) in the case of an eligible compo23 nent sold after December 31, 2032, 0 per24 cent. 

25 ‘‘(c) DEFINITIONS.—For purposes of this section— 

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1 ‘‘(1) ELIGIBLE COMPONENT.— 

2 ‘‘(A) IN GENERAL.—Except as provided in 

3 subparagraphs (B) and (C), the term ‘eligible 

4 component’ means— 

5 ‘‘(i) an approved generic drug, 

6 ‘‘(ii) a licensed biosimilar, and 

7 ‘‘(iii) any drug substance, inter8 mediate, raw material, starting material, 

9 reagent, component, in-process material, 

10 inactive ingredient, container closure sys11 tem, packaging, quality testing, or other 

12 material or service used, or sold with in13 tention for use, in the production of an ap14 proved generic drug or a licensed bio15 similar. 

16 ‘‘(B) EXCLUSION OF CERTAIN COMPO17 NENTS.—The term ‘eligible component’ shall 

18 not include a component any portion of the pro19 duction of which occurred at a facility which is 

20 the subject of a warning letter— 

21 ‘‘(i) which was issued by the Food 

22 and Drug Administration on or after Sep23 tember 1, 2009, and 

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1 ‘‘(ii) with respect to which the Food 

2 and Drug Administration has not issued a 

3 close-out letter. 

4 ‘‘(C) APPLICATION WITH OTHER CRED5 ITS.—The term ‘eligible component’ shall not 

6 include any property which is produced at a fa7 cility if the basis of any property which is part 

8 of such facility is taken into account for pur9 poses of the credit allowed under section 48F 

10 after the date of the enactment of this section. 

11 ‘‘(2) APPROVED GENERIC DRUG.—The term 

12 ‘approved generic drug’ means— 

13 ‘‘(A) a drug for which an approval of an 

14 application filed under section 505(j) of the 

15 Federal Food, Drug, and Cosmetic Act (21 

16 U.S.C. 355(j)) is in effect, or 

17 ‘‘(B) an authorized generic drug. 

18 ‘‘(3) AUTHORIZED GENERIC DRUG; DRUG SUB19 STANCE; DRUG PRODUCT.—The terms ‘authorized 

20 generic drug’, ‘drug substance’, and ‘drug product’ 

21 have the respective meanings given such terms in 

22 section 314.3 of title 21, Code of Federal Regula23 tions (or any successor regulation). 

24 ‘‘(4) BIOLOGICAL PRODUCT.—The term ‘bio25 logical product’ has the meaning given such term in 

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1 section 351(i)(1) of the Public Health Service Act 

2 (42 U.S.C. 262(i)(1)). 

3 ‘‘(5) LICENSED BIOSIMILAR.—The term ‘li4 censed biosimilar’ means a biological product for 

5 which a biologics license has been issued under sec6 tion 351(k) of the Public Health Service Act (42 

7 U.S.C. 262(k)). 

8 ‘‘(6) PRODUCED IN THE UNITED STATES.—The 

9 term ‘produced in the United States’ means that all 

10 the production of the material or component takes 

11 place in the United States, regardless of the origin 

12 of the subcomponents of such material or compo13 nent. 

14 ‘‘(7) PRODUCTION.—The term ‘production’ 

15 means all steps in the manufacture, propagation, 

16 and preparation of an eligible component, including 

17 synthesis, mixing, granulating, milling, molding, 

18 lyophilizing, tableting, encapsulating, coating, steri19 lizing, testing, filling, labeling, packaging, and stor20 age prior to release by the manufacturer. 

21 ‘‘(d) SPECIAL RULES.—Rules similar to the rules of 

22 paragraphs (1), (3), and (4) of section 45X(d) shall 

23 apply.’’. 

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1 (b) ELECTIVE PAYMENT.—Section 6417(a) of the In2 ternal Revenue Code of 1986 is amended by adding at the 

3 end the following new paragraph: 

4 ‘‘(13) The generic drugs and biosimilars pro5 duction credit determined under section 45BB.’’. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) Section 38(b) of the Internal Revenue Code 

8 of 1986 is amended— 

9 (A) in paragraph (40), by striking ‘‘plus’’ 

10 at the end, and 

11 (B) in paragraph (41), by striking the pe12 riod at the end and inserting ‘‘, plus’’, and by 

13 adding at the end the following new paragraph: 

14 ‘‘(42) the generic drugs and biosimilars produc15 tion credit determined under section 45BB(a).’’. 

16 (2) The table of sections for subpart D of part 

17 IV of subchapter A of chapter 1 of the Internal Rev18 enue Code of 1986 is amended by adding at the end 

19 the following new item: 

‘‘Sec. 45BB. Generic drugs and biosimilars production credit.’’. 

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

21 this section shall apply to generic drugs and biologics pro22 duced after the date of enactment of this Act. 

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1 SEC. 3. GENERIC DRUGS AND BIOSIMILARS INVESTMENT 

2 CREDIT. 

3 (a) IN GENERAL.—Subpart E of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 is amended by inserting after section 48E the fol6 lowing new section: 

7 ‘‘SEC. 48F. GENERIC DRUGS AND BIOSIMILARS INVEST8 MENT CREDIT. 

9 ‘‘(a) ESTABLISHMENT OF CREDIT.—For purposes of 

10 section 46, the generic drugs and biosimilars investment 

11 credit for any taxable year is an amount equal to 25 per12 cent of the qualified investment for such taxable year with 

13 respect to any qualified facility of an eligible taxpayer. 

14 ‘‘(b) QUALIFIED INVESTMENT.— 

15 ‘‘(1) IN GENERAL.—For purposes of subsection 

16 (a), the qualified investment for any taxable year is 

17 the basis of any qualified property placed in service 

18 by the taxpayer during such taxable year which is 

19 part of a qualified facility. 

20 ‘‘(2) QUALIFIED PROPERTY.— 

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

22 subsection, the term ‘qualified property’ means 

23 property— 

24 ‘‘(i) which is tangible property, 

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1 ‘‘(ii) with respect to which deprecia2 tion (or amortization in lieu of deprecia3 tion) is allowable, 

4 ‘‘(iii) which is— 

5 ‘‘(I) constructed, reconstructed, 

6 or erected by the taxpayer, or 

7 ‘‘(II) acquired by the taxpayer if 

8 the original use of such property com9 mences with the taxpayer, and 

10 ‘‘(iv) which is integral to the operation 

11 of the qualified facility. 

12 ‘‘(B) BUILDINGS AND STRUCTURAL COM13 PONENTS.— 

14 ‘‘(i) IN GENERAL.—The term ‘quali15 fied property’ includes any building or its 

16 structural components which otherwise sat17 isfy the requirements under subparagraph 

18 (A). 

19 ‘‘(ii) EXCEPTION.—Clause (i) shall 

20 not apply with respect to a building or por21 tion of a building used for offices, adminis22 trative services, or other functions unre23 lated to the production of eligible compo24 nents. 

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1 ‘‘(3) QUALIFIED FACILITY.—For purposes of 

2 this section, the term ‘qualified facility’ means a fa3 cility the primary purpose of which is the production 

4 of eligible components. 

5 ‘‘(4) COORDINATION WITH REHABILITATION

6 CREDIT.—The qualified investment with respect to 

7 any qualified facility for any taxable year shall not 

8 include that portion of the basis of any property 

9 which is attributable to qualified rehabilitation ex10 penditures (as defined in section 47(c)(2)). 

11 ‘‘(5) CERTAIN PROGRESS EXPENDITURE RULES

12 MADE APPLICABLE.—Rules similar to the rules of 

13 subsections (c)(4) and (d) of section 46 (as in effect 

14 on the day before the date of the enactment of the 

15 Revenue Reconciliation Act of 1990) shall apply for 

16 purposes of subsection (a). 

17 ‘‘(c) DEFINITIONS.—For purposes of this section— 

18 ‘‘(1) ELIGIBLE TAXPAYER.—The term ‘eligible 

19 taxpayer’ means any taxpayer which— 

20 ‘‘(A) is not a foreign entity of concern (as 

21 defined in section 9901(8) of the William M. 

22 (Mac) Thornberry National Defense Authoriza23 tion Act for Fiscal Year 2021 (15 U.S.C. 

24 4651), and 

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1 ‘‘(B) has not made an applicable trans2 action (as defined in section 50(a)) during the 

3 taxable year. 

4 ‘‘(2) ELIGIBLE COMPONENT.—The term ‘eligi5 ble component’ has the meaning given such term in 

6 section 45BB(c)(1). 

7 ‘‘(3) PRODUCTION.—The term ‘production’ has 

8 the meaning given such term in section 45BB(c)(6). 

9 ‘‘(d) TERMINATION OF CREDIT.—The credit allowed 

10 under this section shall not apply to property the construc11 tion of which begins after December 31, 2027.’’. 

12 (b) ELECTIVE PAYMENT.—Section 6417(a) of the In13 ternal Revenue Code of 1986, as amended by section 2(b) 

14 of this Act, is amended by adding at the end the following 

15 new paragraph: 

16 ‘‘(14) The generic drugs and biosimilars invest17 ment credit determined under section 48F.’’. 

18 (c) CONFORMING AMENDMENTS.— 

19 (1) Section 46 is amended— 

20 (A) in paragraph (6), by striking ‘‘and’’ at 

21 the end, 

22 (B) in paragraph (7), by striking the pe23 riod at the end and inserting ‘‘, and’’, and 

24 (C) by adding at the end the following: 

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1 ‘‘(8) the generic drugs and biosimilars invest2 ment credit.’’. 

3 (2) Section 49(a)(1)(C) is amended— 

4 (A) by striking ‘‘and’’ at the end of clause 

5 (vi), 

6 (B) by striking the period at the end of 

7 clause (vii) and inserting a comma, and 

8 (C) by adding at the end the following new 

9 clause: 

10 ‘‘(viii) the basis of any qualified prop11 erty which is part of a qualified facility 

12 under section 48F.’’. 

13 (3) The table of sections for subpart E of part 

14 IV of subchapter A of chapter 1 is amended by in15 serting after the item relating to section 48E the fol16 lowing new item: 

‘‘48F. Generic drugs and biosimilars investment credit.’’. 

17 (d) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to property placed in service after 

19 December 31, 2025. 

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