BIOCOM Pursues Life Science Economic Stimulus Provisions
Many of you may know that Congress and President Obama are in the process of finalizing an economic stimulus package. We anticipate its completion in the near future.
Joe Panetta and BIOCOM's Public Policy staff traveled to Washington, DC this month in an effort to aid BIO in its efforts to push a proposal that would add provisions in the stimulus package that would help life sciences companies receive a one-time discounted advance on a percentage of their accumulated net operating losses ("NOLs"). This would result in these companies being eligible for a refund check from the government under very specific circumstances (see below).
In Washington DC, BIOCOM met with the staffs of Congressmembers Brian Bilbray and Susan Davis to discuss the proposal and further explain how supporting provisions like these could help save our member companies who are struggling to raise the capital needed to continue their R&D programs.
Under this proposal, any funds received by companies would be required to be used for R&D activities in the U.S. or else would be recaptured by the U.S. Treasury. We noted this proposal is not a "bailout". It simply allows companies to utilize Net Operating Loss carry forward credits at a significantly discounted rate at an earlier point in development than they currently would be able. As the money has already been spent by the company, these NOL's represent money that has already been spent on qualified expenses once in the US, and would be guaranteed to be recirculated into the economy as qualified U.S. research dollars.
BIOCOM supports this concept, and urges all member companies to show your support by writing or calling your Congressmember today.
Click here for a copy of BIOCOM's letter to Congress on behalf of the industry.
Please click here for speaking points you may use if you are interested in calling members of Congress.
More Information
Economic Stimulus Options to Promote Innovation and Job Creation for Emerging Companies
1). One Time Refund of NOLs in Lieu of Other Tax Benefits to Sustain Critical R&D During Financial Distress Description: Allow companies to temporarily elect to receive a refund of their accumulated net operating losses (NOLs) at a discounted rate in lieu of claiming qualified research expenses, as defined by Code §41(b), for Tax Year 2008. The proposal would have the following features:
• Election to receive a refund of accrued NOLs at a discounted rate (i.e., 35% corporate tax rate minus a discount percentage)
• Refunds must be reinvested in investments that would qualify as U.S.-based research expenses under Code §41(b)
• Company would permanently forgo the opportunity to claim all NOLs involved in the computation of the refund
• Applies only to loss companies in Tax Year 2008
• Limited to small companies
• Refund capped at a per company dollar amount
Example: Assuming a discount percentage of 15%, a small biotech/hightech/ clean-tech company with $100M in accumulated NOLs could elect to claim a refund of $20M on their 2008 tax return ($100M x (35% - 15%) = $20M). The $20M refund could only be used to pay for U.S.-based research activities. The company would forgo the ability to carry forward the remaining $80M in NOLs for future tax years.
Rationale: Many of America's most-promising companies in the areas of science and technology are struggling to raise the necessary research funding to survive the current economic slowdown and may disappear if economic conditions do not improve in the very near future. In order to save the high-paying, researchintensive jobs of America's innovation economy, Congress should allow companies to accelerate the utilization of their tax assets. Companies struggling to conduct capital‐intensive R&D and meet payroll during the economic downturn will forgo a larger tax benefit in the future to claim a smaller tax benefit today. The proposal has minimal revenue impact since companies are only claiming accumulated NOLs at a substantial discount in return for forgoing the ability to claim remaining NOLs for future tax years.
Join BIOCOM In Sacramento March 24
In reading a newspaper story or perusing a note from your compliance department, have you ever said to yourself, "I'd like to give the people who voted for this a piece of my mind"? Ever think, "If they only understood what we go through on a daily basis"? Well, you have a chance to be a part of the solution at both the state and federal levels.
On Tuesday, March 24th, BIOCOM will join with BayBio, the California Healthcare Institute, and the Southern California Biomedical Council in presenting Life Sciences Day in Sacramento. This is a day where groups of industry professionals and patient advocates are sent in to meet with state legislators on those issues which affect the industry. The last few years we have had well over 100 participants from all over the state, giving a human face to the industry detailing the challenges we face every day. The day is capped by a reception attended by the participants and many legislators, where you can speak to them in a much more informal setting.
On the afternoon of March 31 and all day Wednesday, April 1, the Biotechnology Industry Organization (BIO) will host its annual Congressional Fly-In. This is an opportunity to meet with Southern California Members of Congress (or their staff representatives) and discuss federal issues of interest to the industry. Life science professionals from throughout the country will do the same with representatives from their geographic regions.
Your participation will help make the challenges of the industry real and meaningful to these elected officials.
To sign up for California Life Sciences Day, please go to http://www.lifesciencesday.org/
For the BIO Fly-In, you may find hotel and registration information at http://www.bio.org/flyin/
AdvaMed Updates Its Code of Ethics
The Advanced Medical Technology Association ("AdvaMed") has released an updated version of it's Code of Ethics on Interactions with Health Care Professionals (the "Code"). The Code establishes guidelines for medical technology companies ("Companies") for dealing with physicians and other health care professionals ("HCPs"). The Code is intended to help Companies avoid inappropriate inducements to HCPs to order or utilize their products. The revised Code, which becomes effective July 1, 2009, includes many clarifications and enhancements. The following summarizes three of the many significant changes:
Prohibition on Entertainment or Recreation. The current Code sets forth guidelines addressing the circumstances under which it is appropriate for Companies to provide meals and refreshments to HCPs. The revised Code expands this guidance and includes an explicit prohibition on providing entertainment or recreation of any kind, including items such as theater tickets, sporting events, golf, skiing and vacations.
Gifts. The current Code permits modest gifts to HCPs which benefit patients or serve a genuine educational function, provided they have a fair market value of less than $100, with an exception for medical textbooks or anatomical models for educational purposes. The current Code also permits occasional gifts of branded promotional items of minimal value related to the HCP's work or for the benefit of patients. The revised Code prohibits non-educational branded items, even if they are of minimal value and related to the HCP's work or for the benefit of patients. This includes pens, notepads, mugs and other items with the Company's name or logo. The revised Code also expressly provides that Companies may not give flowers, food baskets or other gifts, even to recognize an HCP's "life events" such as a wedding or birthday.
Royalties. The current Code provides guidelines for consulting relationships with HCPs. The revised Code adds guidelines for establishing royalty relationships.
The foregoing are only three of the many significant changes in the Code. More information can be found on the AdvaMed website at: http://advamed.org/MemberPortal/About/code/.
Submitted by: R. Michael Scarano, Jr., Partner, Foley & Lardner LLP, mscarano@foley.com
SBIR Grant Deadline Approaches
The National Cancer Institute (NCI) Small Business InnovationResearch Program (SBIR) has recently announced a new SBIR Phase IIBridge funding opportunity. The Bridge Award is designed to support thenext stage of development for previously funded NIH SBIR Phase IIprojects in areas such as cancer imaging technologies. This awardaddresses the funding gap between the end of the SBIR Phase II awardand the subsequent financing needed to advance a product towardcommercialization.
The SBIR Phase II Bridge Award morethan triples the amount of funding available to applicants through theNCI SBIR Program and incentivizes the development of partnershipsbetween awardees and third-party investors and/or strategic partners.Budgets up to $1 million in total costs per year and project periods upto three years may be requested from the NCI.
The deadline to apply for the NCI SBIR Program Phase II Bridge Award is February 27, 2009.
If you would like to read more about the SBIR & STTR Programs, please visit the SBIR website: http://sbir.cancer.gov. More information on the Bridge Award can be found at: http://sbir.cancer.gov/funding/phase2bridgeaward.asp.
How to Apply
View online resources and tips for applying that help small businessesprepare their grant applications and contract proposals. [Learn more]
TheSBIR Development Center helps to build relationships with the businesscommunity and researchers by supporting small business applicants, andby fostering partnerships and collaborations between small businessesand third-party organizations. If you are interested in discussing yourorganization's project with NCI Development Center staff to explore howit aligns with NCI's priorities, please contact a Program Director at ncisbir@mail.nih.gov.
Medical Device News from MDMA
New York Times Looks at NICE and Comparative Effectiveness
The New York Times reported on the effects of comparative effectiveness in the United Kingdom. Specifically, the article described how patients in the UK had difficulty accessing certain treatments under coverage polices set by the National Institute for Clinical Excellence (NICE). The author goes on to describe how NICE has become a model for other health care systems throughout the world as well as describe what potentially lies ahead for the United States.
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/26/AR2008112603842.html
Congressional Budget Office Releases Reports on Healthcare
The Congressional Budget Office (CBO) recently released two reports on healthcare. The reports are intended to help policymakers on issues related to the American health care system and federal healthcare programs.
The first report, Key Issues in Analyzing Major Health Insurance Proposals, looks at broad based proposals and provides CBO's impact analysis on various legislative and regulatory proposals. The second report, Options, Volume I: Health Care, looks at numerous options on issues related to the financing and delivery of healthcare generally.
The reports can be found here:
http://www.cbo.gov/
Recycle Electronic Toys and TVs at the San Diego Futures Foundation
"If you have old computers, monitors, TVs or other electronic equipment to get rid of after the holidays, you can recycle it with the San Diego Futures Foundation, a 501(c)3 nonprofit organization located in the City Heights area of San Diego," said Megan Graulich, Executive Director. "Recycling with San Diego Futures Foundation is easy, free and environmentally responsible."
SDFF recycles computers, laptops, CD Drives, copy/fax machines and more at NO COST to corporations or individuals. For a complete list of donated items, please log onto www.sdfutures.org. Donations are tax deductible.
San Diego Futures Foundation
RECYCLING AND SALVAGE CENTER DROP OFF LOCATION
4283 EL Cajon Blvd, Suite 140
San Diego, CA 92105
619.269.1684 option "1"
Hours: Tuesday and Thursdays, 11:30am - 4pm, or by scheduled appointment.