The federal government has fired the starting pistol on a $1 billion tax credit/grant program that could provide up to $5 million in R&D support for qualifying biotech companies. On Friday the Obama administration spelled out the rules on the new program, which is expected to be swiftly swamped by a deluge of applications.
"We expect the program to be heavily oversubscribed," BIO Spokesperson Ellen Dadisman told the Washington Post. "I think that's an indication of its popularity and its necessity." One member of the administration told the Wall Street Journal that "thousands" of applications are expected.
In short, a company with fewer than 250 employees engaged in developing new medications, diagnostics and devices will be eligible to receive the money either as a tax credit or as a grant. Companies developing promising new therapies that address unmet needs and cut healthcare costs will be eligible for the credit or grant, which can cover up to 50 percent of development costs for 2009 and 2010. The government will give "special" consideration for cancer drugs. Steve Levy, CPA, provides more details about the new rules for the program.