Treasury Secretary Timothy Geithner and National Institutes of Health Director Francis Collins have announced a new tax credit as part of the Patient Protection and Affordable Care Act of 2010, pertaining to biotechnology research.

A fact sheet provided by the government website healthreform.gov states that the Therapeutic Discovery Tax Credit is immediately effective and will cover up to 50 percent of qualifying biomedical research costs. The Internal Revenue Service (IRS) will consult with the Department of Health and Human Services (HHS) in conducting the program.

The credit is available for firms with 250 or fewer workers, and for projects that show "significant potential to produce new and cost-saving therapies, support good jobs, and increase U.S. competitiveness. Firms have the option to receive a grant rather than a credit.
A new IRS guidance describes how firms can apply for the credit, and have their research projects certified as eligible. The IRS guidance defines a qualifying therapeutic discovery project as one that is designed: to treat or prevent diseases or conditions by conducting pre-clinical activities, clinical trials, clinical studies, or carrying out research protocols for the purpose of securing product approval under the Federal Food, Drug, and Cosmetic Act or the Public Health Service Act; to diagnose diseases or conditions or to determine molecular factors related to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions; or to develop a product, process, or technology to further the delivery or administration of therapeutics.

In their dual supervision of the program, HHS will determine that a submitted project application shows reasonable potential to result in new therapies either for unmet medical needs or to prevent, detect or treat chronic or acute diseases or conditions; or to reduce long-term health care costs; or to significantly advance a cure for cancer within a 30-year period beginning this year. The IRS will determine that the project has high potential to create and sustain high-quality, high-paying jobs in the U.S. and to advance competitiveness in the areas of life, biological, and medical sciences.

The application process will be open from June 21 to July 21, and final determinations will be given by October 29, 2010.

The fact sheet on the credit is available at: http://www.treas.gov/press/releases/reports/5.21.10%20therapeutic%20discovery%20fact%20sheet.pdf

The IRS guidance is available at: http://www.irs.gov/pub/irs-drop/n-10-45.pdf

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