[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6109 Introduced in House (IH)]

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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.

    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 chapter A of chapter 1 of 
the Internal Revenue Code of 1986 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 
                during the taxable year.
            ``(2) Production and sale must be in trade or business; 
        unrelated person.--Rules similar to the rules of paragraphs (2) 
        and (3) of section 45X(a) 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.--
            ``(1) In general.--Subject to paragraph (4), the amount 
        determined under this subsection with respect to any eligible 
        component shall be an amount equal to--
                    ``(A) the value added to such component by the 
                taxpayer, multiplied by
                    ``(B) the base credit percentage.
            ``(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 
                shall be 30 percent.
                    ``(B) Increased base credit percentage for certain 
                eligible components.--The base credit percentage shall 
                be 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 paragraph, the term `domestic 
                        content percentage' means the percentage of the 
                        total cost of the bill of materials of the 
                        eligible component that is attributable to 
                        materials and components that were produced in 
                        the United States.
                            ``(iii) Documentation rules.--
                                    ``(I) Recordkeeping.--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) Phaseout.--
                    ``(A) In general.--In the case of any eligible 
                component sold after December 31, 2029, 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 after the 
                        application of paragraphs (2) and (3)), 
                        multiplied by
                            ``(ii) the phaseout percentage under 
                        subparagraph (B).
                    ``(B) Phaseout percentage.--The phase out 
                percentage under this subparagraph is equal to--
                            ``(i) in the case of an eligible component 
                        sold during calendar year 2030, 75 percent,
                            ``(ii) in the case of an eligible component 
                        sold during calendar year 2031, 50 percent,
                            ``(iii) in the case of an eligible 
                        component sold during calendar year 2032, 25 
                        percent,
                            ``(iv) in the case of an eligible component 
                        sold after December 31, 2032, 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.
            ``(3) Authorized generic drug; drug substance; drug 
        product.--The terms `authorized generic drug', `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).
            ``(4) 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)).
            ``(5) Licensed biosimilar.--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)).
            ``(6) 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.
            ``(7) 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.''.
    (b) Elective Payment.--Section 6417(a) 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.''.
    (c) Conforming Amendments.--
            (1) Section 38(b) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) in paragraph (40), by striking ``plus'' at the 
                end, and
                    (B) in paragraph (41), by striking the period at 
                the end and inserting ``, plus'', and 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.''.
    (d) 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.--
            ``(1) In general.--For purposes of subsection (a), 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.--For purposes of this subsection, 
                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 integral to the operation 
                        of the qualified facility.
                    ``(B) Buildings and structural components.--
                            ``(i) In general.--The term `qualified 
                        property' includes any building or its 
                        structural components which otherwise satisfy 
                        the requirements under 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.--For purposes of this section, 
        the term `qualified facility' means a facility 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 for purposes of subsection (a).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible taxpayer.--The term `eligible taxpayer' 
        means any taxpayer which--
                    ``(A) 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), and
                    ``(B) has not made an applicable transaction (as 
                defined in section 50(a)) during the taxable year.
            ``(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, 2027.''.
    (b) Elective Payment.--Section 6417(a) of the Internal Revenue Code 
of 1986, as amended by section 2(b) of this Act, is amended by adding 
at the end the following new paragraph:
            ``(14) The generic drugs and biosimilars investment credit 
        determined under section 48F.''.
    (c) Conforming Amendments.--
            (1) Section 46 is amended--
                    (A) in paragraph (6), by striking ``and'' at the 
                end,
                    (B) in paragraph (7), by striking the period at the 
                end and inserting ``, and'', and
                    (C) by adding at the end the following:
            ``(8) the generic drugs and biosimilars investment 
        credit.''.
            (2) Section 49(a)(1)(C) is amended--
                    (A) by striking ``and'' at the end of clause (vi),
                    (B) by striking the period at the end of clause 
                (vii) and inserting a comma, and
                    (C) by adding at the end the following new clause:
                            ``(viii) 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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2025.
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