119-hr1396

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1396 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 1396

 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

 February 14, 2025

 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.

 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 ``Producing Incentives for Long-term 
production of Lifesaving Supply of medicine Act'' or the ``PILLS Act''.

SEC. 2. GENERIC DRUGS AND BIOSIMILARS PRODUCTION CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``

SEC. 45BB. GENERIC DRUGS AND BIOSIMILARS PRODUCTION CREDIT.

 ``

    (a) In General.--
 ``

    (1) Allowance of credit.--For purposes of 

section 38, the 
 generic drugs and biosimilars production credit for any taxable 
 year is an amount equal to the credit amount determined under 
 subsection

    (b) with respect to each eligible component which 
 is--
 ``
        (A) produced by the taxpayer in the United 
 States, and
 ``
        (B) sold by such taxpayer to an unrelated person 
 (as determined by the Secretary) during the taxable 
 year.
 ``

    (2) Production and sale must be in trade or business.--
 Rules similar to the rules of 

section 45X

    (a)

    (2) shall apply.
 ``

    (3) Disallowance of credit.--The credit under this 
 subsection shall not be allowed to any taxpayer which, at any 
 time during the taxable year, was a foreign entity of concern 
 (as defined in 

section 9901

    (8) of the William M.

    (Mac) Thornberry National Defense Authorization Act for Fiscal Year 
 2021 (15 U.S.C. 4651)).
 ``

    (b) Credit Amount.--For purposes of this section--
 ``

    (1) In general.--Subject to paragraph

    (4) , the amount 
 determined under this subsection with respect to any eligible 
 component is an amount equal to the base credit percentage of 
 the value added to such component by the taxpayer.
 ``

    (2) Value added.--The value added to a component by a 
 taxpayer is an amount equal to--
 ``
        (A) the gross receipts received by the taxpayer 
 from the sale of the eligible component, minus
 ``
        (B) the cost of eligible components purchased 
 from an unrelated person in connection with the 
 production of the component by the taxpayer.
 ``

    (3) Base credit percentage.--
 ``
        (A) In general.--Except as provided in 
 subparagraphs
        (B) and
            (C) , the base credit percentage 
 is 30 percent.
 ``
        (B) Increased base credit percentage for certain 
 eligible components.--The base credit percentage is 35 
 percent in the case of the final production of--
 ``
            (i) a drug substance,
 ``
            (ii) a drug product, or
 ``
            (iii) a biological product.
 ``
            (C) Domestic content bonus credit.--
 ``
            (i) In general.--In the case of an 
 eligible component which contains domestic 
 content, the base credit percentage determined 
 under this paragraph (determined without regard 
 to this subparagraph) shall be increased by an 
 amount equal to--
 ``
            (I) the domestic content 
 percentage, multiplied by
 ``
            (II) 0.20.
 ``
            (ii) Domestic content percentage.--For 
 purposes of this subparagraph, the term 
 `domestic content percentage' means the 
 percentage of the total cost of the eligible 
 components taken into account for purposes of 
 paragraph

    (2) which is attributable to 
 materials and components that were produced in 
 the United States.
 ``
            (iii) Documentation rules.--
 ``
            (I) Record keeping.--No domestic 
 content bonus credit shall be 
 determined under this subparagraph 
 unless the taxpayer provides 
 documentation supporting the domestic 
 content percentage (in such form and 
 manner as the Secretary shall 
 prescribe).
 ``
            (II) Certification by unrelated 
 party.--In the case of materials or 
 components provided to the taxpayer by 
 an unrelated party, the Secretary shall 
 accept certification (in such form and 
 manner as the Secretary shall 
 prescribe) by such unrelated party that 
 the materials or components were 
 produced in the United States.
 ``

    (4) Phase out.--
 ``
        (A) In general.--In the case of any eligible 
 component sold after December 31, 2030, the amount 
 determined under this subsection with respect to such 
 component shall be equal to the product of--
 ``
            (i) the amount determined under paragraph

    (1) with respect to such component (determined 
 without regard to this paragraph and after the 
 application of paragraphs

    (2) and

    (3) ), and
 ``
            (ii) the phase out percentage.
 ``
        (B) Phase out percentage.--For purposes of 
 subparagraph
        (A) , the phase out percentage is--
 ``
            (i) in the case of an eligible component 
 sold during calendar year 2031, 75 percent,
 ``
            (ii) in the case of an eligible component 
 sold during calendar year 2032, 50 percent,
 ``
            (iii) in the case of an eligible 
 component sold during calendar year 2033, 25 
 percent, and
 ``
            (iv) in the case of an eligible component 
 sold after December 31, 2033, 0 percent.
 ``
            (c) === Definitions. ===
-For purposes of this section--
 ``

    (1) Eligible component.--
 ``
        (A) In general.--Except as provided in 
 subparagraphs
        (B) and
            (C) , the term `eligible 
 component' means--
 ``
            (i) an approved generic drug,
 ``
            (ii) a licensed biosimilar, and
 ``
            (iii) any drug substance, intermediate 
 raw material, starting material, reagent, 
 component, in-process material, inactive 
 ingredient, container closure system, 
 packaging, quality testing, or other material 
 or service used, or sold with intention for 
 use, in the production of an approved generic 
 drug or a licensed biosimilar.
 ``
        (B) Exclusion of certain components.--The term 
 `eligible component' shall not include a component any 
 portion of the production of which occurred at a 
 facility which is the subject of a warning letter--
 ``
            (i) which was issued by the Food and Drug 
 Administration on or after September 1, 2009, 
 and
 ``
            (ii) with respect to which the Food and 
 Drug Administration has not issued a close-out 
 letter.
 ``
            (C) Application with other credits.--The term 
 `eligible component' shall not include any property 
 which is produced at a facility if the basis of any 
 property which is part of such facility is taken into 
 account for purposes of the credit allowed under 
 

section 48F after the date of the enactment of this 
 section.
 ``

    (2) Approved generic drug.--The term `approved generic 
 drug' means--
 ``
        (A) a drug for which an approval of an 
 application filed under 

section 505

    (j) of the Federal 
 Food, Drug, and Cosmetic Act (21 U.S.C. 355

    (j) ) is in 
 effect, or
 ``
        (B) an authorized generic drug (as defined in 
 

section 314.3 of title 21, Code of Federal Regulations 
 (or any successor regulation)).
 ``

    (3) Licensed biosimilar.--
 ``
        (A) In general.--The term `licensed biosimilar' 
 means a biological product for which a biologics 
 license has been issued under 

section 351

    (k) of the 
 Public Health Service Act (42 U.S.C. 262

    (k) ).
 ``
        (B) Biological product.--The term `biological 
 product' has the meaning given such term in 

section 351
            (i) (1) of the Public Health Service Act (42 U.S.C. 
 262
            (i) (1) ).
 ``

    (4) Other terms.--The terms `drug substance' and `drug 
 product' have the respective meanings given such terms in 
 

section 314.3 of title 21, Code of Federal Regulations (or any 
 successor regulation).
 ``

    (5) Produced in the united states.--The term `produced in 
 the United States' means that all the production of the 
 material or component takes place in the United States, 
 regardless of the origin of the subcomponents of such material 
 or component.
 ``

    (6) Production.--The term `production' means all steps in 
 the manufacture, propagation, and preparation of an eligible 
 component, including synthesis, mixing, granulating, milling, 
 molding, lyophilizing, tableting, encapsulating, coating, 
 sterilizing, testing, filling, labeling, packaging, and storage 
 prior to release by the manufacturer.
 ``
            (d) Special Rules.--Rules similar to the rules of paragraphs

    (1) ,

    (3) , and

    (4) of 

section 45X
            (d) shall apply.
 ``

    (e) Regulatory Authority.--The Secretary shall prescribe such 
regulations and other guidance as are appropriate or necessary to carry 
out the purposes of this section.''.

    (b) Elective Payment.--

    (1) In general.--

Section 6417

    (b) of the Internal Revenue 
 Code of 1986 is amended by adding at the end the following new 
 paragraph:
 ``

    (13) The generic drugs and biosimilars production credit 
 determined under 

section 45BB.''.

    (2) Election with respect to other entities.--Paragraph

    (1) of 

section 6417
            (d) is amended--
        (A) by redesignating subparagraph
        (E) as 
 subparagraph
        (F) ,
        (B) by striking ``or
            (D) '' each place it appears in 
 subparagraph
        (F) , as so redesignated, and inserting 
 ``
            (D) , or
        (E) '', and
            (C) by inserting after subparagraph
            (D) the 
 following new subparagraph:
 ``
        (E) Election with respect to generic drugs and 
 biosimilars production credit.--
 ``
            (i) In general.--If a taxpayer other than 
 an entity described in subparagraph
        (A) makes 
 an election under this subparagraph with 
 respect to any taxable year in which such 
 taxpayer has, after December 31, 2024, produced 
 eligible components (as defined in 

section 45BB
            (c) (1) ), such taxpayer shall be treated as 
 an applicable entity for purposes of this 
 section for such taxable year, but only with 
 respect to the credit described in subsection

    (b)

    (13) .
 ``
            (ii) Other rules.--The rules of clauses
            (ii) and
            (iii) of subparagraph
            (D) shall apply 
 for purposes of this subparagraph.''.
            (c) Transfer of Credits.--

Section 6418

    (f)

    (1)
        (A) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
clause:
 ``
            (xii) The generic drugs and biosimilars 
 production credit determined under 

section 45BB.''.
            (d) Conforming Amendments.--

    (1) Section 38

    (b) of the Internal Revenue Code of 1986 is 
 amended--
        (A) by striking ``plus'' at the end of paragraph

    (40) ,
        (B) by striking the period at the end of paragraph

    (41) and inserting ``, plus'', and
            (C) by adding at the end the following new 
 paragraph:
 ``

    (42) the generic drugs and biosimilars production credit 
 determined under 

section 45BB

    (a) .''.

    (2) The table of sections for subpart D of part IV of 
 subchapter A of chapter 1 of the Internal Revenue Code of 1986 
 is amended by adding at the end the following new item:

``

Sec. 45BB. Generic drugs and biosimilars production credit.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to generic drugs and biologics produced after the date of 
enactment of this Act.

SEC. 3. GENERIC DRUGS AND BIOSIMILARS INVESTMENT CREDIT.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 

section 48E the following new section:

``

SEC. 48F. GENERIC DRUGS AND BIOSIMILARS INVESTMENT CREDIT.

 ``

    (a) Establishment of Credit.--For purposes of 

section 46, the 
generic drugs and biosimilars investment credit for any taxable year is 
an amount equal to 25 percent of the qualified investment for such 
taxable year with respect to any qualified facility of an eligible 
taxpayer.
 ``

    (b) Qualified Investment.--For purposes of this section--
 ``

    (1) In general.--The qualified investment for any taxable 
 year is the basis of any qualified property placed in service 
 by the taxpayer during such taxable year which is part of a 
 qualified facility.
 ``

    (2) Qualified property.--
 ``
        (A) In general.--The term `qualified property' 
 means property--
 ``
            (i) which is tangible property,
 ``
            (ii) with respect to which depreciation 
 (or amortization in lieu of depreciation) is 
 allowable,
 ``
            (iii) which is--
 ``
            (I) constructed, reconstructed, 
 or erected by the taxpayer, or
 ``
            (II) acquired by the taxpayer if 
 the original use of such property 
 commences with the taxpayer, and
 ``
            (iv) which is used as an integral part of 
 the qualified facility to produce eligible 
 components.
 ``
        (B) Buildings and structural components.--
 ``
            (i) In general.--The term `qualified 
 property' includes any building or its 
 structural components which otherwise satisfies 
 the requirements of subparagraph
        (A) .
 ``
            (ii) Exception.--Clause
            (i) shall not 
 apply with respect to a building or portion of 
 a building used for offices, administrative 
 services, or other functions unrelated to the 
 production of eligible components.
 ``

    (3) Qualified facility.--The term `qualified facility' 
 means a facility--
 ``
        (A) which is owned (in whole or in part) by the 
 taxpayer,
 ``
        (B) which is located in the United States or any 
 territory of the United States, and
 ``
            (C) the primary purpose of which is the 
 production of eligible components.
 ``

    (4) Coordination with rehabilitation credit.--The 
 qualified investment with respect to any qualified facility for 
 any taxable year shall not include that portion of the basis of 
 any property which is attributable to qualified rehabilitation 
 expenditures (as defined in 

section 47
            (c) (2) ).
 ``

    (5) Certain progress expenditure rules made applicable.--
 Rules similar to the rules of subsections
            (c) (4) and
            (d) of 
 

section 46 (as in effect on the day before the date of the 
 enactment of the Revenue Reconciliation Act of 1990) shall 
 apply.
 ``
            (c) === Definitions. ===
-For purposes of this section--
 ``

    (1) Eligible taxpayer.--The term `eligible taxpayer' 
 means any taxpayer which is not a foreign entity of concern (as 
 defined in 

section 9901

    (8) of the William M.

    (Mac) Thornberry 
 National Defense Authorization Act for Fiscal Year 2021 (15 
 U.S.C. 4651)).
 ``

    (2) Eligible component.--The term `eligible component' 
 has the meaning given such term in 

section 45BB
            (c) (1) .
 ``

    (3) Production.--The term `production' has the meaning 
 given such term in 

section 45BB
            (c) (6) .
 ``
            (d) Termination of Credit.--The credit allowed under this section 
shall not apply to property the construction of which begins after 
December 31, 2028.
 ``

    (e) Regulatory Authority.--The Secretary shall prescribe such 
regulations and other guidance as are appropriate or necessary to carry 
out the purposes of this section.''.

    (b) Elective Payment.--

    (1) In general.--

Section 6417

    (b) of the Internal Revenue 
 Code of 1986, as amended by 

section 2

    (b) of this Act, is 
 further amended by adding at the end the following new 
 paragraph:
 ``

    (14) The generic drugs and biosimilars investment credit 
 determined under 

section 48F.''.

    (2) Election with respect to other entities.--Paragraph

    (1) of 

section 6417
            (d) of such Code, as amended by this Act, is 
 further amended--
        (A) by redesignating subparagraph
        (F) as 
 subparagraph
        (G) ,
        (B) by striking ``or
        (E) '' each place it appears in 
 subparagraph
        (G) , as so redesignated, and inserting 
 ``
        (E) , or
        (F) '', and
            (C) by inserting after subparagraph
        (E) the 
 following new subparagraph:
 ``
        (F) Election with respect to generic drugs and 
 biosimilars investment credit.--If a taxpayer other 
 than an entity described in subparagraph
        (A) makes an 
 election under this subparagraph with respect to any 
 taxable year in which such taxpayer has placed in 
 service a qualified facility (as defined in 

section 48F

    (b)

    (3) ), such taxpayer shall be treated as an 
 applicable entity for purposes of this section for such 
 taxable year, but only with respect to the credit 
 described in subsection

    (b)

    (14) .''.
            (c) Transfer of Credits.--

Section 6418

    (f)

    (1)
        (A) of the Internal 
Revenue Code of 1986, as amended by this Act, is further amended by 
adding at the end the following new clause:
 ``
            (xiii) The generic drugs and biosimilars 
 investment credit determined under 

section 48F.''.
            (d) Conforming Amendments.--

    (1) Section 46 of the Internal Revenue Code of 1986 is 
 amended--
        (A) by striking ``and'' at the end of paragraph

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

    (7) and inserting ``, and'', and
            (C) by adding at the end the following new 
 paragraph:
 ``

    (8) the generic drugs and biosimilars investment 
 credit.''.

    (2) Section 49

    (a)

    (1)
            (C) of such Code is amended--
        (A) by striking ``and'' at the end of clause
            (vii) ,
        (B) by striking the period at the end of clause
            (viii) and inserting ``, and'', and
            (C) by adding at the end the following new clause:
 ``
            (ix) the basis of any qualified property 
 which is part of a qualified facility under 
 

section 48F.''.

    (3) The table of sections for subpart E of part IV of 
 subchapter A of chapter 1 is amended by inserting after the 
 item relating to 

section 48E the following new item:

``48F. Generic drugs and biosimilars investment credit.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2026.
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