New Bill Offers 40% Tax Credit for Medical Manufacturing in High-Poverty Areas, Prioritizes Pandemic Prep for Chronic Illnesses

The new Medical Manufacturing, Economic Development, and Sustainability Act of 2025 (MMEDS Act) is essentially a massive, two-part strategy: first, it uses big tax breaks to pull medical manufacturing back to the U.S. and into high-poverty areas; and second, it updates our public health playbook to better protect people with chronic conditions during the next big health crisis.

The Big Tax Break: 40% Off for Building Medical Gear

Section 2 of this bill creates a massive new tax incentive aimed squarely at medical manufacturers. If a company sets up shop in a newly designated “economically distressed zone”—which generally means a census tract that’s had a poverty rate of at least 30% for the last five years—they can claim a tax credit equal to 40% of the wages, benefits, and equipment depreciation costs for employees working there. Think about that: 40% back on their biggest operating costs, just for making drugs, devices, or critical components in these specific areas.

This is a huge lever designed to boost domestic supply chains and create jobs where they are needed most. For example, a medical device company could get a 40% credit on the salary and health insurance costs for every engineer and factory worker they hire in one of these zones. The credit can even jump to 60% if the facility is moving production back to the U.S. from a foreign country flagged as a supply chain risk. There’s also a second credit for companies that buy products or services (like specialized raw materials or maintenance) from other businesses operating within these distressed zones, further strengthening the local economy.

Who Actually Gets to Be a “Distressed Zone”?

Here’s where it gets complicated. The designation process for these “economically distressed zones” is strict. While some areas automatically qualify based on that five-year, 30% poverty rate, others need to apply to the federal government. This application requires state and local governments to submit a detailed strategic plan showing how they will coordinate economic development, involve the community, and set clear benchmarks. Because the benefits are so huge, expect intense competition and lobbying from local governments trying to secure this designation. The designation lasts for 15 years, which is a long-term commitment of federal resources.

For taxpayers, the concern here is the cost. Giving away 40% to 60% of manufacturing labor costs is a massive tax expenditure. While it aims to create jobs in high-poverty areas, it means the U.S. Treasury will be footing a significant portion of the bill, essentially subsidizing the industry. Also, companies that already claim other popular credits, like the Research & Development credit, can't double-dip—they have to choose which credit to use for those expenses, which could be a tricky calculation for highly innovative firms.

Securing the Supply Chain and Protecting Vulnerable People

Section 3 shifts gears entirely, focusing on public health preparedness. The bill recognizes that when a pandemic hits, people with underlying non-communicable diseases (like diabetes or heart disease) are often hit the hardest. It gives the Secretary of Health and Human Services (HHS) new authority to prioritize the research, development, and stockpiling of “population health products.”

What are these? Drugs that target those chronic conditions to prevent them from becoming severe during a crisis. The bill specifically focuses on protecting “Vulnerable American Populations,” which now explicitly includes children, pregnant women, older adults, and minority populations. This means that instead of just focusing on vaccines and antivirals for the infectious agent, the government must also ensure we have a robust supply of, say, insulin or specific heart medications that might be critical to keeping vulnerable people out of the hospital during the next pandemic wave.

This is a smart, forward-looking update to our crisis preparation. It acknowledges the real-world data from COVID-19, which showed that existing health disparities were huge drivers of severe outcomes. By requiring HHS to coordinate with agencies like Medicare/Medicaid (CMS) and the VA, the bill aims to ensure that once these critical population health products are developed, they get distributed quickly and continuously to the people who need them most.