,,ii #aaith ,,congress #ast ,session ,s4 #ahia ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #bb1 #bjbe,mr4 ,cotton introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to establish the generic drugs and biosimilars production credit1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,producing ,incentives for ,long-term production of ,lifesaving ,supply of medicine ,act or the ,,pills ,act4 #b4 ,generic drugs and biosimilars production credit 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de;,,bb4 ,generic drugs and biosimilars production credit 7a7 ,in general 7#a7 ,allowance of credit ,for purposes of section #ch1 the generic drugs and biosimilars production credit for any taxable year is an amount equal to the credit amount determined under subsection 7b7 with respect to each eligible component which is-- 7,a7 produced by the taxpayer in the ,united ,states1 and 7,b7 sold by such taxpayer to an unrelated person 7as determined by the ,secretary7 during the taxable year4 7#b7 ,production and sale must be in trade or business ,rules similar to the rules of section #de,x7a77#b7 shall apply4 7#c7 ,disallowance of credit ,the credit under this subsection shall not be allowed to any taxpayer which1 at any time during the taxable year1 was a foreign entity of concern 7as defined in section #iija7h7 of the ,william ,m4 7,mac7 ,thornberry ,national ,defense ,authorization ,act for ,fiscal ,year #bjba 7#ae ,u4,s4,c4 #dfea774 7b7 ,credit amount ,for purposes of this section-- 7#a7 ,in general ,subject to paragraph 7#d71 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 taxpayer4 7#b7 ,value added ,the value added to a component by a taxpayer is an amount equal to-- 7,a7 the gross receipts received by the taxpayer from the sale of the eligible component1 minus 7,b7 the cost of eligible components purchased from an unrelated person in connection with the production of the component by the taxpayer4 7#c7 ,base credit percentage 7,a7 ,in general ,except as provided in subparagraphs 7,b7 and 7,c71 the base credit percentage is #cj percent4 7,b7 ,increased base credit percentage for certain eligible components ,the base credit percentage is #ce percent in the case of the final production of-- 7i7 a drug substance1 7ii7 a drug product1 or 7iii7 a biological product4 7,c7 ,domestic content bonus credit 7i7 ,in general ,in the case of an eligible component which contains domestic content1 the base credit percentage determined under this paragraph 7determined without regard to this subparagraph7 shall be increased by an amount equal to-- 7,i7 the domestic content percentage1 multiplied by 7,,ii7 #j4bj4 7ii7 ,domestic content percentage ,for purposes of this subparagraph1 the term domestic content percentage means the percentage of the total cost of the eligible components taken into account for purposes of paragraph 7#b7 which is attributable to materials and components that were produced in the ,united ,states4 7iii7 ,documentation rules 7,i7 ,record keeping ,no domestic content bonus credit shall be determined under this subparagraph unless the taxpayer provides documentation supporting the domestic content percentage 7in such form and manner as the ,secretary shall prescribe74 7,,ii7 ,certification by unrelated party ,in the case of materials or components provided to the taxpayer by an unrelated party1 the ,secretary shall accept certification 7in such form and manner as the ,secretary shall prescribe7 by such unrelated party that the materials or components were produced in the ,united ,states4 7#d7 ,phase out 7,a7 ,in general ,in the case of any eligible component sold after ,december #ca1 #bjcj1 the amount determined under this subsection with respect to such component shall be equal to the product of-- 7i7 the amount determined under paragraph 7#a7 with respect to such component 7determined without regard to this paragraph and after the application of paragraphs 7#b7 and 7#c771 and 7ii7 the phase out percentage4 7,b7 ,phase out percentage ,for purposes of subparagraph 7,a71 the phase out percentage is-- 7i7 in the case of an eligible component sold during calendar year #bjca1 #ge percent1 7ii7 in the case of an eligible component sold during calendar year #bjcb1 #ej percent1 7iii7 in the case of an eligible component sold during calendar year #bjcc1 #be percent1 and 7iv7 in the case of an eligible component sold after ,december #ca1 #bjcc1 #j percent4 7c7 ,definitions ,for purposes of this section-- 7#a7 ,eligible component 7,a7 ,in general ,except as provided in subparagraphs 7,b7 and 7,c71 the term eligible component means-- 7i7 an approved generic drug1 7ii7 a licensed biosimilar1 and 7iii7 any drug substance1 intermediate raw material1 starting material1 reagent1 component1 in-process material1 inactive ingredient1 container closure system1 packaging1 quality testing1 or other material or service used1 or sold with intention for use1 in the production of an approved generic drug or a licensed biosimilar4 7,b7 ,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-- 7i7 which was issued by the ,food and ,drug ,administration on or after ,september #a1 #bjji1 and 7ii7 with respect to which the ,food and ,drug ,administration has not issued a close-out letter4 7,c7 ,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 #dh;,f after the date of the enactment of this section4 7#b7 ,approved generic drug ,the term approved generic drug means-- 7,a7 a drug for which an approval of an application filed under section #eje7;j7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee7;j77 is in effect1 or 7,b7 an authorized generic drug 7as defined in section #cad4c of title #ba1 ,code of ,federal ,regulations 7or any successor regulation774 7#c7 ,licensed biosimilar 7,a7 ,in general ,the term licensed biosimilar means a biological product for which a biologics license has been issued under section #cea7k7 of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb7k774 7,b7 ,biological product ,the term biological product has the meaning given such term in section #cea7;i77#a7 of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb7;i77#a774 7#d7 ,other terms ,the terms drug substance and drug product have the respective meanings given such terms in section #cad4c of title #ba1 ,code of ,federal ,regulations 7or any successor regulation74 7#e7 ,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 ,states1 regardless of the origin of the subcomponents of such material or component4 7#f7 ,production ,the term production means all steps in the manufacture1 propagation1 and preparation of an eligible component1 including synthesis1 mixing1 granulating1 milling1 molding1 lyophilizing1 tableting1 encapsulating1 coating1 sterilizing1 testing1 filling1 labeling1 packaging1 and storage prior to release by the manufacturer4 7d7 ,special rules ,rules similar to the rules of paragraphs 7#a71 7#c71 and 7#d7 of section #de,x7d7 shall apply4 7e7 ,regulatory authority ,the ,secretary shall prescribe such regulations and other guidance as are appropriate or necessary to carry out the purposes of this section4 4 7b7 ,elective payment 7#a7 ,in general ,section #fdag7;b7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#ac7 ,the generic drugs and biosimilars production credit determined under section #de;,,bb4 4 7#b7 ,election with respect to other entities ,paragraph 7#a7 of section #fdag7;d7 is amended-- 7,a7 by redesignating subparagraph 7,e7 as subparagraph 7,f71 7,b7 by striking or 7,d7 each place it appears in subparagraph 7,f71 as so redesignated1 and inserting 7,d71 or 7,e71 and 7,c7 by inserting after subparagraph 7,d7 the following new subparagraph3 7,e7 ,election with respect to generic drugs and biosimilars production credit 7i7 ,in general ,if a taxpayer other than an entity described in subparagraph 7,a7 makes an election under this subparagraph with respect to any taxable year in which such taxpayer has1 after ,december #ca1 #bjbd1 produced eligible components 7as defined in section #de;,,bb7c77#a771 such taxpayer shall be treated as an applicable entity for purposes of this section for such taxable year1 but only with respect to the credit described in subsection 7b77#ac74 7ii7 ,other rules ,the rules of clauses 7ii7 and 7iii7 of subparagraph 7,d7 shall apply for purposes of this subparagraph4 4 7c7 ,transfer of credits ,section #fdah7;f77#a7;,a7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new clause3 7xii7 ,the generic drugs and biosimilars production credit determined under section #de;,,bb4 4 7d7 ,conforming amendments 7#a7 ,section #ch7;b7 of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 by striking plus at the end of paragraph 7#dj71 7,b7 by striking the period at the end of paragraph 7#da7 and inserting 1 plus1 and 7,c7 by adding at the end the following new paragraph3 7#db7 the generic drugs and biosimilars production credit determined under section #de;,,bb7a74 4 7#b7 ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new item3 ,sec4 #de;,,bb4 ,generic drugs and biosimilars production credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to generic drugs and biologics produced after the date of enactment of this ,act4 #c4 ,generic drugs and biosimilars investment credit 7a7 ,in general ,subpart ,e of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #dh;,e the following new section3 #dh;,f4 ,generic drugs and biosimilars investment credit 7a7 ,establishment of credit ,for purposes of section #df1 the generic drugs and biosimilars investment credit for any taxable year is an amount equal to #be percent of the qualified investment for such taxable year with respect to any qualified facility of an eligible taxpayer4 7b7 ,qualified investment ,for purposes of this section-- 7#a7 ,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 facility4 7#b7 ,qualified property 7,a7 ,in general ,the term qualified property means property-- 7i7 which is tangible property1 7ii7 with respect to which depreciation 7or amortization in lieu of depreciation7 is allowable1 7iii7 which is-- 7,i7 constructed1 reconstructed1 or erected by the taxpayer1 or 7,,ii7 acquired by the taxpayer if the original use of such property commences with the taxpayer1 and 7iv7 which is used as an integral part of the qualified facility to produce eligible components4 7,b7 ,buildings and structural components 7i7 ,in general ,the term qualified property includes any building or its structural components which otherwise satisfies the requirements of subparagraph 7,a74 7ii7 ,exception ,clause 7i7 shall not apply with respect to a building or portion of a building used for offices1 administrative services1 or other functions unrelated to the production of eligible components4 7#c7 ,qualified facility ,the term qualified facility means a facility-- 7,a7 which is owned 7in whole or in part7 by the taxpayer1 7,b7 which is located in the ,united ,states or any territory of the ,united ,states1 and 7,c7 the primary purpose of which is the production of eligible components4 7#d7 ,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 7as defined in section #dg7;c77#b774 7#e7 ,certain progress expenditure rules made applicable ,rules similar to the rules of subsections 7c77#d7 and 7d7 of section #df 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij7 shall apply4 7c7 ,definitions ,for purposes of this section-- 7#a7 ,eligible taxpayer ,the term eligible taxpayer means any taxpayer which is not a foreign entity of concern 7as defined in section #iija7h7 of the ,william ,m4 7,mac7 ,thornberry ,national ,defense ,authorization ,act for ,fiscal ,year #bjba 7#ae ,u4,s4,c4 #dfea74 7#b7 ,eligible component ,the term eligible component has the meaning given such term in section #de;,,bb7c77#a74 7#c7 ,production ,the term production has the meaning given such term in section #de;,,bb7c77#f74 7d7 ,termination of credit ,the credit allowed under this section shall not apply to property the construction of which begins after ,december #ca1 #bjbh4 7e7 ,regulatory authority ,the ,secretary shall prescribe such regulations and other guidance as are appropriate or necessary to carry out the purposes of this section4 4 7b7 ,elective payment 7#a7 ,in general ,section #fdag7;b7 of the ,internal ,revenue ,code of #aihf1 as amended by section #b7;b7 of this ,act1 is further amended by adding at the end the following new paragraph3 7#ad7 ,the generic drugs and biosimilars investment credit determined under section #dh;,f4 4 7#b7 ,election with respect to other entities ,paragraph 7#a7 of section #fdag7;d7 of such ,code1 as amended by this ,act1 is further amended-- 7,a7 by redesignating subparagraph 7,f7 as subparagraph 7,g71 7,b7 by striking or 7,e7 each place it appears in subparagraph 7,g71 as so redesignated1 and inserting 7,e71 or 7,f71 and 7,c7 by inserting after subparagraph 7,e7 the following new subparagraph3 7,f7 ,election with respect to generic drugs and biosimilars investment credit ,if a taxpayer other than an entity described in subparagraph 7,a7 makes an election under this subparagraph with respect to any taxable year in which such taxpayer has placed in service a qualified facility 7as defined in section #dh;,f7b77#c771 such taxpayer shall be treated as an applicable entity for purposes of this section for such taxable year1 but only with respect to the credit described in subsection 7b77#ad74 4 7c7 ,transfer of credits ,section #fdah7;f77#a7;,a7 of the ,internal ,revenue ,code of #aihf1 as amended by this ,act1 is further amended by adding at the end the following new clause3 7xiii7 ,the generic drugs and biosimilars investment credit determined under section #dh;,f4 4 7d7 ,conforming amendments 7#a7 ,section #df of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 by striking and at the end of paragraph 7#f71 7,b7 by striking the period at the end of paragraph 7#g7 and inserting 1 and1 and 7,c7 by adding at the end the following new paragraph3 7#h7 the generic drugs and biosimilars investment credit4 4 7#b7 ,section #di7;a77#a77;,c7 of such ,code is amended-- 7,a7 by striking and at the end of clause 7vii71 7,b7 by striking the period at the end of clause 7viii7 and inserting 1 and1 and 7,c7 by adding at the end the following new clause3 7ix7 the basis of any qualified property which is part of a qualified facility under section #dh;,f4 4 7#c7 ,the table of sections for subpart ,e of part ,,iv of subchapter ,a of chapter #a is amended by inserting after the item relating to section #dh;,e the following new item3 #dh;,f4 ,generic drugs and biosimilars investment credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to property placed in service after ,december #ca1 #bjbf4