MMEDS Act of 2021
Bill: S.1203 | Sponsor: Sen. Rubio, Marco (R-FL)
Policy area: Taxation

Summary:
Medical Manufacturing, Economic Development, and Sustainability Act of 2021 or the MMEDS Act of 2021
This bill provides incentives for relocating medical manufacturing facilities in the United States and for manufacturing medical products (i.e., drugs and devices) in economically distressed zones. Specifically, the bill allows a income tax credit for 40% of the sum of wages paid in a medical product manufacturing economically distressed zone, employee fringe benefit expenses, and depreciation and amortization allowances with respect to qualified medical product manufacturing facility property, and a credit for economically distressed zone products and services acquired by domestic medical product manufacturers..
The bill also directs the Department of Health and Human Services to study the extent to which the health of aging individuals and vulnerable populations have been disproportionately harmed by the COVID-19 (i.e., coronavirus disease 2019) pandemic and prior epidemics and pandemics.

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

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Manufacturing, Economic 
Development, and Sustainability Act of 2021'' or the ``MMEDS Act of 
2021''.

SEC. 2. ECONOMICALLY DISTRESSED ZONES.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

    ``Subchapter AA--Medical Product Manufacturing 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.

``SEC. 1400AA-1. MEDICAL PRODUCT MANUFACTURING IN ECONOMICALLY 
              DISTRESSED ZONE CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by subtitle A for the taxable year an amount 
equal to 40 percent of the sum of--
            ``(1) the aggregate amount of the taxpayer's medical 
        product manufacturing economically distressed zone wages for 
        such taxable year,
            ``(2) the allocable employee fringe benefit expenses of the 
        taxpayer for such taxable year, and
            ``(3) the depreciation and amortization allowances of the 
        taxpayer for the taxable year with respect to qualified medical 
        product manufacturing facility property.
    ``(b) Denial of Double Benefit.--Any wages or other expenses taken 
into account in determining the credit under this section may not be 
taken into account in determining the credit under sections 41, and any 
other provision determined by the Secretary to be substantially 
similar.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Economically distressed zone wages.--
                    ``(A) In general.--The term `economically 
                distressed zone wages' means amounts paid or incurred 
                for wages during the taxable year which are--
                            ``(i) in connection with the active conduct 
                        of a trade or business of the taxpayer, and
                            ``(ii) paid or incurred for an employee the 
                        principal place of employment of whom is in a 
                        qualified medical product manufacturing 
                        facility of such taxpayer.
                    ``(B) Limitation on amount of wages taken into 
                account.--
                            ``(i) In general.--The amount of wages 
                        which may be taken into account under 
                        subparagraph (A) with respect to any employee 
                        for any taxable year shall not exceed the 
                        contribution and benefit base determined under 
                        section 230 of the Social Security Act for the 
                        calendar year in which such taxable year 
                        begins.
                            ``(ii) Treatment of part-time employees, 
                        etc.--If--
                                    ``(I) any employee is not employed 
                                by the taxpayer on a substantially 
                                full-time basis at all times during the 
                                taxable year, or
                                    ``(II) the principal place of 
                                employment of any employee is not 
                                within an economically distressed zone 
                                at all times during the taxable year,
                        the limitation applicable under clause (i) with 
                        respect to such employee shall be the 
                        appropriate portion (as determined by the 
                        Secretary) of the limitation which would 
                        otherwise be in effect under clause (i).
                    ``(C) Treatment of certain employees.--The term 
                `economically distressed zone wages' shall not include 
                any wages paid to employees who are assigned by the 
                employer to perform services for another person, unless 
                the principal trade or business of the employer is to 
                make employees available for temporary periods to other 
                persons in return for compensation.
                    ``(D) Wages.--For purposes of this paragraph, the 
                term `wages' shall not include any amounts which are 
                allocable employee fringe benefit expenses.
            ``(2) Allocable employee fringe benefit expenses.--
                    ``(A) In general.--The term `allocable employee 
                fringe benefit expenses' means the aggregate amount 
                allowable as a deduction under this chapter to the 
                taxpayer for the taxable year for the following amounts 
                which are allocable to employment in a qualified 
                medical product manufacturing facility:
                            ``(i) Employer contributions under a stock 
                        bonus, pension, profit-sharing, or annuity 
                        plan.
                            ``(ii) Employer-provided coverage under any 
                        accident or health plan for employees.
                            ``(iii) The cost of life or disability 
                        insurance provided to employees.
                    ``(B) Allocation.--For purposes of subparagraph 
                (A), an amount shall be treated as allocable to a 
                qualified medical product manufacturing facility only 
                if such amount is with respect to employment of an 
                individual for services provided, and the principal 
                place of employment of whom is, in such facility.
            ``(3) Qualified medical product manufacturing facility.--
        The term `qualified medical product manufacturing facility' 
        means any facility that--
                    ``(A) researches and develops or produces medical 
                products or essential components of medical products, 
                and
                    ``(B) is located within an economically distressed 
                zone.
            ``(4) Qualified medical product manufacturing facility 
        property.--The term `qualified medical product manufacturing 
        facility property' means any property originally used in (or 
        consisting of) a qualified medical product manufacturing 
        facility if such property is directly connected to the 
        research, development, or production of a medical product.
            ``(5) Medical product; essential component.--
                    ``(A) Medical product.--The term `medical product' 
                means--
                            ``(i) a drug that--
                                    ``(I) is a prescription drug 
                                subject to regulation under section 505 
                                of the Federal Food, Drug, and Cosmetic 
                                Act (21 U.S.C. 355) or section 351 of 
                                the Public Health Service Act (42 
                                U.S.C. 262);
                                    ``(II) is subject to regulation 
                                under section 802 of the Federal Food, 
                                Drug, and Cosmetic Act (21 U.S.C. 382); 
                                or
                                    ``(III) is described in section 
                                201(jj) of such Act (21 U.S.C. 
                                321(jj)); or
                            ``(ii) a device, as defined in section 
                        201(h) of such Act (21 U.S.C. 321(h)).
                    ``(B) Essential component.--The term `essential 
                component' means, with respect to a medical product--
                            ``(i) an active pharmaceutical ingredient; 
                        or
                            ``(ii) a protein, antibody, enzyme, 
                        hormone, or other organic material that is an 
                        active ingredient in a biological product.
            ``(6) Aggregation rules.--
                    ``(A) In general.--For purposes of this section, 
                members of an affiliated group shall be treated as a 
                single taxpayer.
                    ``(B) Affiliated group.--The term `affiliated 
                group' means an affiliated group (as defined in section 
                1504(a), determined without regard to section 
                1504(b)(3)) one or more members of which are engaged in 
                the active conduct of a trade or business within an 
                economically distressed zone.

``SEC. 1400AA-2. CREDIT FOR ECONOMICALLY DISTRESSED ZONE PRODUCTS AND 
              SERVICES ACQUIRED BY DOMESTIC MEDICAL PRODUCT 
              MANUFACTURERS.

    ``(a) Allowance of Credit.--In the case of an eligible medical 
product manufacturer, there shall be allowed as a credit against the 
tax imposed by subtitle A for the taxable year an amount equal to the 
applicable percentage of the aggregate amounts paid or incurred by the 
taxpayer during such taxable year for qualified products or services.
    ``(b) Applicable Percentage.--For purposes of this section, the 
term applicable percentage means--
            ``(1) 30 percent in the case of amounts paid or incurred to 
        persons not described in paragraph (2) or (3), and
            ``(2) 5 percent in the case of amounts paid or incurred to 
        a related person.
    ``(c) Eligible Medical Product Manufacturer.--For purposes of this 
section, the term `eligible medical product manufacturer' means any 
person in the trade or business of producing medical products in the 
United States.
    ``(d) Qualified Product or Service.--For purposes of this section, 
the term `qualified product or service' means--
            ``(1) any product which is produced in an economically 
        distressed zone and which is integrated into a medical product 
        produced by the taxpayer, and
            ``(2) any service which is provided in an economically 
        distressed zone and which is necessary to the production of a 
        medical product by the taxpayer (including packaging).
    ``(e) Related Persons.--For purposes of this section, persons shall 
be treated as related to each other if such persons would be treated as 
a single employer under the regulations prescribed under section 52(b).
    ``(f) Other Terms.--Terms used in this section which are also used 
in section 1400AA-1 shall have the same meaning as when used in such 
section.

``SEC. 1400AA-3. SPECIAL RULES TO SECURE THE NATIONAL SUPPLY CHAIN.

    ``(a) In General.--In the case of a qualified repatriated 
pharmaceutical manufacturing facility, section 1400AA-1(a) shall be 
applied by substituting `60 percent' for `40 percent'.
    ``(b) Election To Expense in Lieu of Tax Credit for Depreciation.--
In the case of a taxpayer which elects (at such time and in such manner 
as the Secretary may provide) the application of this subsection with 
respect to any qualified repatriated medical product manufacturing 
facility or qualified population health product manufacturing 
facility--
            ``(1) section 1400AA-1(a)(3) shall not apply with respect 
        to any qualified medical product manufacturing facility 
        property with respect to such facility, and
            ``(2) for purposes of section 168(k)--
                    ``(A) such property shall be treated as qualified 
                property, and
                    ``(B) the applicable percentage with respect to 
                such property shall be 100 percent.
    ``(c) Qualified Repatriated Medical Product Manufacturing 
Facility.--For purposes of this section, the term `qualified 
repatriated medical product manufacturing facility' means any qualified 
medical product manufacturing facility (as defined in section 1400AA-1) 
the production of which was moved to an economically distressed zone 
from a foreign country that the United States Trade Representative has 
determined could pose a risk to the national supply chain because of 
political or social factors.

``SEC. 1400AA-4. DESIGNATION OF ECONOMICALLY DISTRESSED ZONES.

    ``(a) In General.--For purposes of this subchapter, the term 
`economically distressed zone' means any population census tract within 
the United States which--
            ``(1) has a poverty rate of not less than 35 percent for 
        each of the 5 most recent calendar years for which information 
        is available, or
            ``(2) satisfies each of the following requirements:
                    ``(A) The census tract has pervasive poverty, 
                unemployment, low labor force participation, and 
                general distress measured as a prolonged period of 
                economic decline measured by real gross national 
                product.
                    ``(B) The census tract has a poverty rate of not 
                less than 30 percent for each of the 5 most recent 
                calendar years for which information is available.
                    ``(C) The census tract has been designated as such 
                by the Secretary and the Secretary of Commerce pursuant 
                to an application under subsection (b).
    ``(b) Application for Designation.--
            ``(1) In general.--An application for designation as an 
        economically distressed zone may be filed by a State or local 
        government in which the population census tract to which the 
        application applies is located.
            ``(2) Requirements.--Such application shall include a 
        strategic plan for accomplishing the purposes of this 
        subchapter, which--
                    ``(A) describes the coordinated economic, human, 
                community, and physical development plan and related 
                activities proposed for the nominated area,
                    ``(B) describes the process by which the affected 
                community is a full partner in the process of 
                developing and implementing the plan and the extent to 
                which local institutions and organizations have 
                contributed to the planning process,
                    ``(C) identifies the amount of State, local, and 
                private resources that will be available in the 
                nominated area and the private/public partnerships to 
                be used, which may include participation by, and 
                cooperation with, universities, medical centers, and 
                other private and public entities,
                    ``(D) identifies the funding requested under any 
                Federal program in support of the proposed economic, 
                human, community, and physical development and related 
                activities,
                    ``(E) identifies baselines, methods, and benchmarks 
                for measuring the success of carrying out the strategic 
                plan, including the extent to which poor persons and 
                families will be empowered to become economically self-
                sufficient, and
                    ``(F) does not include any action to assist any 
                establishment in relocating from one area outside the 
                nominated area to the nominated area, except that 
                assistance for the expansion of an existing business 
                entity through the establishment of a new branch, 
                affiliate, or subsidiary is permitted if--
                            ``(i) the establishment of the new branch, 
                        affiliate, or subsidiary will not result in a 
                        decrease in employment in the area of original 
                        location or in any other area where the 
                        existing business entity conducts business 
                        operations,
                            ``(ii) there is no reason to believe that 
                        the new branch, affiliate, or subsidiary is 
                        being established with the intention of closing 
                        down the operations of the existing business 
                        entity in the area of its original location or 
                        in any other area where the existing business 
                        entity conducts business operation, and
                            ``(iii) includes such other information as 
                        may be required by the Secretary and the 
                        Secretary of Commerce.
    ``(c) Period for Which Designations Are in Effect.--Designation as 
an economically distressed zone may be made at any time during the 10-
year period beginning on the date of the enactment of this section, and 
shall remain in effect with respect to such zone during the 15-year 
period beginning on the date of such designation. Economically 
distressed zones described in subsection (a)(1) shall take effect on 
the date of the enactment of this Act and shall remain in effect during 
the 15-year period beginning on such date.
    ``(d) Territories and Possessions.--The term `United States' 
includes the 50 States, the District of Columbia, and the territories 
and possessions of the United States.
    ``(e) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including--
            ``(1) not later than 30 days after the date of the 
        enactment of this section, a list of the population census 
        tracts described in subsection (a)(1), and
            ``(2) not later than 60 days after the date of the 
        enactment of this section, regulations or other guidance 
        regarding the designation of population census tracts described 
        in subsection (a)(2).''.
    (b) Clerical Amendment.--The table of subchapters for chapter 1 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

    ``subchapter aa--medical product manufacturing in economically 
                          distressed zones''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.

SEC. 3. REPORT ON NEED FOR INCENTIVIZING DEVELOPMENT OF THERAPIES.

    Not later than 90 days after the date of enactment of this Act, the 
Secretary of Health and Human Services shall examine and report to the 
Congress on--
            (1) the extent to which the health of aging individuals in 
        the United States, African Americans, Hispanics, Native 
        Americans, veterans, or other vulnerable populations in the 
        United States has been disproportionately harmed by the COVID-
        19 pandemic and prior epidemics and pandemics;
            (2) the therapies currently available, and whether there is 
        a need for additional innovation and development to produce 
        therapies, to reduce the exposure of vulnerable populations in 
        the United States to risk of disproportionate harm in epidemics 
        and pandemics; and
            (3) whether the Secretary recommends providing the same 
        incentives for the development and marketing of therapies 
        described in paragraph (2) as is provided under the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) with 
        respect to qualified infectious disease products designated 
        under section 505E(d) of such Act (21 U.S.C. 355f(d)).
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