The MMEDS Act of 2025 (Medical Manufacturing, Economic Development, and Sustainability Act) would create a new set of federal tax incentives aimed at reviving domestic medical manufacturing in economically distressed areas and strengthening national health supply chains. It would designate certain U.S. census tracts as economically distressed zones and provide tax credits for wages, fringe benefits, and depreciation tied to medical manufacturing activities within those zones. It also offers credits for purchases of products and services produced in those zones by domestic medical manufacturers. The bill further expands incentives for “repatriated” facilities (production moved back from abroad) and facilities that produce population health products, and it includes special rules to support the national supply of critical health products. Separately, it would authorize regulatory and policy changes to prioritize development and timely delivery of population health products to at-risk populations and require a congressionally mandated follow-up report. In short, the bill is designed to boost domestic medical manufacturing in distressed areas, encourage bringing manufacturing back to the U.S., and accelerate development and distribution of population health products, with a focus on protecting vulnerable groups during health emergencies.
Key Points
- 1New tax incentives in a new Subchapter AA of the Internal Revenue Code:
- 2- Medical Manufacturing in Economically Distressed Zone Credit (Sec. 1400AA-1): 40% credit of the sum of distressed-zone wages, allocable fringe benefits, and depreciation/amortization for qualified medical manufacturing facilities in distressed zones.
- 3- Credit for Economically Distressed Zone Products and Services Acquired by Domestic Medical Manufacturers (Sec. 1400AA-2): 30% credit for purchases from non-related parties, 5% for purchases from related parties.
- 4- Special rules for national supply chain and population health products (Sec. 1400AA-3): enhanced credits for qualified repatriated medical manufacturing facilities or qualified population health product manufacturing facilities (e.g., 60% for the wage/asset credit, and higher rates for the purchase credit), plus an option to elect 100% first-year expensing of qualified facility property (bonus depreciation) for these facilities.
- 5- Designation of economically distressed zones (Sec. 1400AA-4): zones are census tracts with high poverty or other signs of persistent distress; designation lasts 15 years once designated, with a 10-year window to designate. State/local governments can apply with strategic plans and partnerships.
- 6Definitions and scope:
- 7- Qualified medical manufacturing facility: a facility that researches, develops, or produces medical products or essential components in a distressed zone.
- 8- Qualified medical manufacturing facility property: property directly connected to the facility’s R&D or production.
- 9- Medical product and essential component: includes certain prescription drugs, devices, and active ingredients critical to medical products.
- 10- Aggregation rules: affiliated groups are treated as a single taxpayer for these credits.
- 11New authority around population health products (Section 3):
- 12- Expands definitions around “qualified countermeasures” and “population health products” to cover drugs, biologics, or devices needed to diagnose, prevent, or treat health threats that could cause epidemics or pandemics, with emphasis on vulnerable populations.
- 13- Prioritizes research and development for countermeasures and population health products likely to benefit at-risk groups.
- 14- Requires timely delivery of approved population health products to at-risk individuals in coordination with other federal agencies.
- 15- Requires a 90-day congressionally mandated report assessing current population health products, gaps, and whether similar incentives should apply to population health products as exist for other infectious-disease products.