“A bill to amend the Internal Revenue Code of 1986 to establish the generic drugs and biosimilars production credit, and for other purposes.”
No CRS summary available for this bill.
This section establishes a new generic drugs and biosimilars production tax credit under IRC §45BB for eligible components (i.e., approved generic drugs, licensed biosimilars, and materials used in their production) produced by the taxpayer in the U.S. and sold to an unrelated person. The credit equals 30% of the taxpayer's value added to the component (i.e., sales price minus cost of purchased eligible components from unrelated persons), increased to 35% for final production of a drug substance, drug product, or biological product, plus a domestic content bonus of up to 20% (based on the percentage of U.S.-produced materials and components, subject to documentation requirements). The credit phases out for components sold after December 31, 2030—to 75% in 2031 (from 100%), 50% in 2032, 25% in 2033, and 0% thereafter—and is unavailable to foreign entities of concern (as defined in 15 U.S.C. §4651), for components produced at facilities subject to unresolved FDA warning letters issued on or after September 1, 2009, or at facilities where property qualifies for the IRC §48F clean electricity investment credit.
This section establishes the generic drugs and biosimilars investment tax credit under new IRC §48F equal to 25% of the basis of qualified property—tangible depreciable property (including certain buildings) that is newly constructed, reconstructed, or erected and integral to producing eligible components (as defined in IRC §45BB(c)(1), i.e., generic drugs and biosimilars)—placed in service after December 31, 2026, as part of a qualified facility located in the United States or its territories and primarily used for such production. (Qualified facilities owned by eligible taxpayers, defined as those that are not foreign entities of concern per 15 U.S.C. §4651, may claim the credit, subject to coordination with the rehabilitation credit and progress expenditure rules; the credit terminates for property whose construction begins after December 31, 2028.) This section further (1) allows elective payment of the credit as a direct payment to applicable entities under IRC §6417 (including a special election for other taxpayers with respect to qualified facilities), and (2) permits transfer of the credit to unrelated taxpayers under IRC §6418.