Sponsors
The bill offers substantial tax incentives and liquidity options to spur domestic generic and biosimilar production—improving supply reliability and onshoring—while trading off federal revenue, added administrative and ownership compliance complexity, and limited-time windows that may favor larger firms over smaller developers.
U.S. manufacturers of generic drugs and biosimilars (including small domestic firms and investors) receive large tax incentives (a value‑added credit and a capital investment credit) that lower project and production costs and make domestic production more financially viable.
Patients who rely on generics and biosimilars and the hospitals that serve them will likely see more reliable drug supplies and fewer shortages as domestic capacity is encouraged and expanded.
Eligible project developers and smaller producers can elect payment or transfer of the credit, improving liquidity and lowering financing barriers for new U.S. facilities that otherwise lack current tax liability.
Taxpayers broadly face reduced federal revenue (and potential higher deficits or crowding out of other spending) if credits are widely claimed, and elective payment/transfer rules can shift upfront budget costs to taxpayers.
Entities owned or controlled by designated 'foreign entities of concern' are barred from the credits, and the exclusion/ screening rules create compliance complexity that may deter some foreign investment and complicate ownership for multinational investors.
The credits are nonrefundable and the program has sunsets/deadlines (phaseouts and construction/start-in-service dates), which limits cash value for firms without tax liability and creates timing pressure that can disadvantage smaller developers or late projects.
Based on analysis of 3 sections of legislative text.
Creates a value-added production tax credit for U.S.-made generics/biosimilars (with domestic-content bonus) and a 25% investment credit for production facilities.
Introduced May 22, 2025 by Thomas Bryant Cotton · Last progress May 22, 2025
Creates two new tax incentives to encourage U.S. production of generic drugs and biosimilars: a value-added production tax credit for eligible components produced and sold in the United States, and a 25% investment tax credit for facilities that produce those products. The production credit is based on the taxpayer’s domestic value added (30% base, 35% for final drug production) with an extra domestic-content bonus, disallows credits for firms classified as a "foreign entity of concern," and phases out beginning in 2031; the investment credit applies to qualified property whose construction begins by Dec. 31, 2028 and to property placed in service after Dec. 31, 2026.