A small amendment to US healthcare reform legislation may prove a big boon for bioscience companies. It would create a $1 billion “credit to encourage new therapies,” allowing small companies (defined as under 250 employees) to write off half their R&D costs or, if they aren't profitable and don't pay taxes, to get an equivalent treasury grant. The amendment, introduced by Sen. Robert Menendez (D-NJ), is modeled after tax credits for alternative energy projects added to the US economic stimulus bill earlier this year. It has been attached by the Senate Finance Committee to the America's Healthy Future Act of 2009, which was introduced by Sen. Max Baucus (D-Mont.), and will become law only if this sweeping reform legislation is enacted. The Biotechnology Industry Organization (BIO) wanted the legislation in the stimulus bill but found legislators more receptive for its inclusion in healthcare reform.

“We are thrilled that the committee chose to pass the amendment,” says Alan Eisenberg, BIO's executive vice president for emerging companies and business development. With the Baucus bill passed out of the Finance Committee, the Menendez amendment is very likely to remain part of the language ultimately voted on by the full Senate, assuming the bill reaches a vote.

Only R&D conducted in 2009 and 2010 is eligible for the program. The credits and grants apply only to qualified “therapeutic discovery” projects, which would be determined by the US Treasury Department, working in conjunction with the US Department of Health and Human Services. Qualifying programs must “show reasonable potential,” with a focus on unmet medical needs, particularly cancer, and reduce healthcare expenditures. There is no specific limit on the credit any particular company can receive, which means $1 billion will be awarded on a first-come, first-served basis. There should be no limit on competition for the awards. Eisenberg notes that over 90% of BIO members fall under the definition of 'small companies' eligible for the program.