Sponsors (3)
The bill trades substantial tax incentives and flexible payment options to spur U.S. production of generics and biosimilars—and improve patient access and domestic jobs—against reduced federal revenue, added compliance complexity, eligibility restrictions, and time-limited incentives that create investment uncertainty.
Generic drug and biosimilar manufacturers receive substantial tax incentives (a production credit up to 30–35% and a 25% investment credit), lowering production and capital costs and encouraging more U.S. facility investment.
Patients with chronic conditions and health systems are likely to benefit from increased domestic production of generics and biosimilars through greater supply and downward pressure on drug prices, improving access and affordability.
The credit can be elected as a direct payment or transferred, giving manufacturers (especially startups and firms without tax liability) improved cash flow and liquidity to build or expand facilities.
The credits and direct payments reduce federal tax revenue, which could increase deficits, crowd out other spending priorities, or require higher taxes later.
Barriers for owners or entities designated as 'foreign entities of concern' and related ownership exclusions complicate eligibility and compliance and may restrict some foreign investment or require complex restructurings.
Time limits and phase-outs (credit elimination after 2033 and a construction-start cutoff at the end of 2028) create investment uncertainty and pressure to accelerate long‑lead manufacturing projects, which could distort investment decisions.
Based on analysis of 3 sections of legislative text.
Creates a production tax credit for domestic manufacture of generics/biosimilars and a 25% investment tax credit for qualified facilities to boost U.S. drug manufacturing.
Official title: To amend the Internal Revenue Code of 1986 to establish the generic drugs and biosimilars production credit, and for other purposes.
Introduced February 14, 2025 by Claudia Tenney · Last progress February 14, 2025
Creates two new tax incentives to encourage domestic production of generic drugs, biosimilars, and their components: (1) a production tax credit that pays manufacturers a percentage of value added for eligible components made and sold in the United States, with higher rates for final drug and biologic production and a bonus for verified domestic content, and (2) a 25% investment tax credit for qualified facilities that build or equip plants that produce generics and biosimilars. Both incentives phase out or sunset on multi-year schedules and exclude certain foreign entities of concern.