Therapeutic Discovery Credits Announced

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Last week, Secretary of the Treasury Tim Geithner and Secretary of Health and Human Services (HHS) Kathleen Sebelius joined with NIH Director Dr. Francis Collins to announce the recipients of the $1 billion in new therapeutic discovery project credits and grants created by the Affordable Care Act. 

According to their press release, this program will help nearly 3,000 small biotechnology companies in nearly every state in the country produce new and cost-saving therapies, support good jobs and increase U.S. competitiveness. Secretary Geithner noted that “These grants will help make sure our companies, entrepreneurs and workers can continue to invest and innovate, which will strengthen our economy now and far into the future.” Companies will receive these grants through the Therapeutic Discovery Project Program.

A total of 2,923 companies specializing in biotechnology and medical research in 47 states and the District of Columbia received awards under the therapeutic discovery project program created by the Affordable Care Act. In all, 4,606 applications from these nearly 3,000 companies were awarded funding.

Secretary Sebelius added that the new program will improve the nation’s health care by giving grants and tax credits to support small biotech firms with big potential across the country. She noted that this funding will help companies “hire more staff, improve facilities and move forward with research projects that might otherwise have been put on hold.

The credit covers up to 50 percent of the cost of qualifying biomedical research and is only available to firms with fewer than 250 employees. The credit is effective for investments made in 2009 and 2010. Firms can opt to receive a grant instead of a tax credit, so start-ups that are not yet profitable can benefit as well.

NIH Director Dr. Collins noted that “These grants made possible by the Affordable Care Act will not only help to create jobs and bolster the economy but also bring us closer to the next generation of life-saving cures.” He further recognized that “The projects funded show significant potential to create new therapies that will address unmet medical needs and bolster the medical countermeasure supply we use to respond to health emergencies.”

The therapeutic discovery project program is targeted to projects that “show significant potential to produce new therapies, address unmet medical needs, reduce the long-term growth of health care costs, or advance the goal of curing cancer within the next 30 years.” The allocation of the credit also reflects which projects show the greatest potential to create and sustain high-quality, high-paying jobs in the United States and to advance our competitiveness in the fields of life, biological, and medical sciences. 

Given that today’s biotechnology industry employs 1.3 million workers, and the industry continues to be a key growth engine for our economy, this program and the investment’s being made in these companies should be applauded. As Secretary Sebelius correctly noted, America and patients cannot “afford to see promising discoveries discarded or innovative businesses move overseas.”

While this is an important step in advancing science and innovation in medicine, companies face numerous other administrative, regulatory, and financial burdens in bringing a product from discovery through development and eventually to the market. As agencies begin to implement grant programs such as these to encourage innovation, there must be equal emphasis on adapting more effective and efficient regulatory policies that will enable these discoveries to be put in the hands of patients.

We do not want to sacrifice safety and reliability of data, but inasmuch as there is a public interest to make sure medicine is safe and effective, there is just as much need to make sure these products reach patients in a timely manner. One of the obstacles that may come about is recent limitations on interactions with industry and academia. If there is any hope that these companies are able to bring these products to the market in the near future, they will almost undoubtedly need leaders in academia to work with industry.  Agencies and Congress should do more to coordinate policies for innovation and limitations on the resources and individuals able to contribute to such projects; otherwise, these grants will be counterproductive if no one is able to work with industry to carry out investigations or trials of these new therapies.

Given the overwhelming burden FDA has in approving these drugs, it may be more than ten years until Americans or patients ever see an actual benefit from these grants. Nevertheless, the importance of this project is significant because the government has recognized the essential role and partnership between industry and government to continue innovation in medicine and health care. This program should stand as evidence that industry provides value in medicine and healthcare, and should be a starting point for future discussions about how industry can improve delivery and access to healthcare, while improving outcomes through new discoveries.

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