The US government has created a tax credit system worth $1 billion to “provide an immediate boost to US biomedical research and the small businesses that conduct it”.
The scheme is open to companies who have 250 employees or fewer and there will be a maximum credit of $5 million per firm. Created under the Affordable Care Act, the scheme is targeted to projects that “show significant potential to produce new therapies, address unmet medical needs, reduce the long_
term growth of healthcare costs and advance the goal of curing cancer within the next 30 years”.
The Obama Administration announced that “because biomedical research can take many years to turn a profit”, newer firms may be unable to take advantage of a tax credit that offsets income tax liability. Therefore, “to ensure that these firms can benefit, an eligible firm can opt to take the credit as a grant instead of a tax credit.”
Kathleen Sebelius, secretary of Health and Human Services, said “our goal is to make targeted investments so that encouraging leads that otherwise might have been set aside can now be vigorously pursued by some of our best scientists”. She added that the biotech industry has become “a key driver of our high-tech economy, supporting 1.3 million high-quality jobs. Put simply, today’s announcement equals more cures and more jobs”.
The announcement well down well with the Biotechnology Industry Organisation, whose chief executive, Jim Greenwood said that the “prompt dissemination” of guidance by the US government will give small biotechnology companies “a clearer sense of their eligibility and allow them to begin to develop their applications”. He added that the programme brings “a much-needed shot in the arm to small life science companies for whom the capital markets have been frozen”.
