• Become an SSTI Member

    As the most comprehensive resource available for those involved in technology-based economic development, SSTI offers the services that are needed to help build tech-based economies.  Learn more about membership...

  • Subscribe to the SSTI Weekly Digest

    Each week, the SSTI Weekly Digest delivers the latest breaking news and expert analysis of critical issues affecting the tech-based economic development community. Subscribe today!

Health Care Bill Includes 50 Percent Credit for Biotech Research

May 05, 2010

During the debates over the Patient Protection and Affordable Care Act, also known as the Health Care Reform Bill, there was much discussion of whether or not reform would hinder innovation in pharmaceuticals and medicine. As a result, the final legislation included some measures to support research and commercialization in the life science. One such measure, the Therapeutic Discovery Project Credit, offers a 50 percent tax credit or cash grant for qualifying research projects and small- and medium-sized companies. Although many details remain unclear, the credit will, at least, apply to projects undertaken during the 2009 and 2010 tax years.

The 50 percent credit is intended to limit tax liability for biotech companies and their investors. A cash grant is available for companies with no tax liability, or whose liability is less than the amount of the credit.

The legislation authorizes $1 billion in tax credits and grants for the two years of the program. Only companies with 250 employees or fewer may apply. Three types of research projects may qualify for the credit. These include:

  • Projects to treat or prevent diseases or conditions by conducting pre-clinical activities, clinical trials and clinical studies, or carrying out research protocols, for the purpose of securing approval by the Food and Drug Administration (FDA);
  • Projects to diagnose diseases or conditions or to determine molecular factors related to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions; and,
  • Projects to develop a product, process or technology to further the delivery of administration of therapeutics.

Companies claiming the credit or grant must demonstrate that their projects would result in new therapies that would:

  • Treat areas of unmet medical need;
  • Prevent, detect or treat chronic or acute diseases and conditions;
  • Reduce long-term health care costs in the U.S.; or,
  • Significantly advance the goal of curing cancer within the next 30 years.

The Department of Treasury, which will administer the program, also will take into consideration the ability of the project to create and sustain high-quality, high-paying jobs in the U.S. and to advance U.S. competitiveness in life, biological and medical sciences.

Treasury and the Department of Health and Human Services have until May 21 officially to establish the program and issue additional guidance on eligibility and how to apply. Once the program is established, the departments will begin considering and awarding certifications for the credit.

Read the text of the Patient Protection and Affordable Care Act bill (Sec. 9023 addresses the Qualifying Therapeudic Discovery Project Credit) at: http://thomas.loc.gov/cgi-bin/cpquery/?&sid=cp111mY39a&refer=&r_n=sr089.111&db_id=111&item=&sel=TOC_1214046&.

bio, r&d