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S1891119th CongressWALLET

PILLS Act

Sponsored By: Senator Cotton, Tom [R-AR]

Introduced

Summary

Domestic production of generic drugs and biosimilars. This bill would create two new tax credits to encourage U.S. manufacturing and facility investment for approved generics, biosimilars, and their production components.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 2 benefits, 0 costs, 0 mixed.

25% tax credit for drug manufacturers

If enacted, businesses that place qualified drug or biosimilar production property in service after Dec 31, 2026 would be able to claim a tax credit equal to 25% of the property's qualified basis for that taxable year. The property must be tangible, depreciable or amortizable, and used in a U.S. qualified facility that mainly makes eligible components. The credit excludes basis tied to qualified rehabilitation expenditures. Taxpayers that are foreign entities of concern would be ineligible. The credit would be eligible for transfer or elective payment rules under sections 6418 and 6417, with a limited election option for otherwise ineligible taxpayers. The credit does not apply to property the construction of which begins after Dec 31, 2028.

Tax credit for U.S. drug production

If enacted, manufacturers that produce and sell eligible generic drugs, biosimilars, and related components in the United States would be able to claim a per-component production tax credit. The credit equals a base percent of value added: 30% generally and 35% for final production of a drug substance, drug product, or biological product. There is a domestic-content bonus equal to 0.20 times the documented domestic content share. Value added is gross receipts from the sale minus the cost of eligible components bought from unrelated parties. The credit is disallowed for taxpayers who are foreign entities of concern and excludes components made at facilities with unresolved FDA warning letters or tied to property used for the 25% investment credit. The credit phases down for components sold after Dec 31, 2030 (2031: 75%; 2032: 50%; 2033: 25%; after Dec 31, 2033: 0%).

Sponsors & CoSponsors

Sponsor

Cotton, Tom [R-AR]

AR • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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