Sec 382 Tax Bill

Urge Congress to Pass the Biotechnology Future Investment and Expansion Act
Because the biotechnology business model is new, some federal laws and regulations unintentionally harm the industry. The U.S. tax code, for example, penalizes companies that undergo a technical change in ownership by severely restricting their access to credits for accumulated net operating losses. This rule, part of the 1986 tax overhaul, was designed to prevent abuses in which companies were acquired solely for the value of their accumulated losses. Unfortunately, biotech companies practicing routine equity financings that result in a change of ownership will forfeit their legitimate net operating loss credits.

The effects on biotech are measurable: Because of tax inequities, biotechnology companies' cost of capital is up to 48.6 percent higher than that of other firms, according to a 2003 BIO-commissioned study.

BIO's supports corrective legislation - the Biotechnology Future Investment Act (H.R. 2968 and S. 1773) - in both the House and Senate.

Fact Sheet
S. 1773, H.R. 2968: The "Biotechnology Future Investment Expansion Act of 2003." (Oct. 30, 2003) Read the Fact Sheet

Legislative Summary
Summary of S 1773, HR 2968, the Biotechnology Future Investment Act of 2003 (July 3, 2003)
Read the Summary

White Paper
"Taxation and the Incentive to Invest In the Biotech Industry", by Kevin Hassett (Jan. 22, 2003)
Read the White Paper (531 KB PDF)

Text of S. 1773
To permit biomedical research corporations to engage in certain equity financings without incurring limitations on net operating loss carryforwards and certain built-in losses, and for other purposes. (Oct. 22, 2003)
Read the Legislation (PDF)

Text of H. R. 2968
To permit biomedical research corporations to engage in certain equity financings without incurring limitations on net operating loss carryforwards and certain built-in losses, and for other purposes. (July 25, 2003)
Read the Legislation

Research & Development

Permanently Extend the R&D Tax Credit
The 109th Congress passed H.R. 6111, The Tax Relief and Health Care Act of 2006, that included a retroactive extension of the R&D tax credit from January 1, 2006, through December 31, 2007. Also included is language to strengthen the credit with a new credit formula called the Alternative Simplified Credit that would be effective January 1, 2007 through December 31, 2007. This legislation was signed into law December 20, 2006 by President Bush. BIO will continue to advocate for a permanent, strengthened credit throughout the 110th Congress.

Why is R&D important? New vaccines, faster Internet and other communications capabilities, safer transportation, enhanced energy-efficient appliances, higher quality entertainment, better homes, improved national security ... the list of societal benefits as a result of R&D is endless. R&D is the lifeblood of the biotechnology industry and the U.S. economy. Congress should encourage U.S. companies to continue to increase their U.S.-based R&D activities with a strengthened and permanent R&D Credit.

Innovative ideas become reality when companies in America make a strong commitment to invest in research and development. It's a commitment to job creation, to consumers of products and services, and to economic growth.

BIO letters in support of proposal to allow companies to accelerate the use of R&D and AMT tax credits (June 12, 2008)
BIO's Letters to House and Senate Leaders
Read BIO's letter (111 KB PDF)
Read BIO's letter to Senate (109 KB PDF)
Read BIO's letter to House (109 KB PDF)

BIO Applauds House Passage of Research & Development Tax Credit Extension (December 8, 2006)
Read the press release

More Information
R&D Credit Coalition Web Site.
More Info

R&D Tax Credit Archive
Older materials on this subject are available in our archive.
Browse the Archive

Orphan Drug Tax Credit

Clarify the Orphan Drug Tax Credit
More than 20 million Americans suffer from one of over 5,000 rare diseases and medical disorders. Often, patients suffering from one of these debilitating diseases have no available treatments or options.

Recognizing this dilemma, the Congress enacted the Orphan Drug Tax Credit in 1983 in order to encourage biotechnology and pharmaceutical companies to develop therapies for rare diseases and conditions that affect 200,000 or fewer patients. By reducing the costs of developing drugs for small patient populations, the credit allows companies to develop products that would otherwise be commercially unfeasible.

However, the Orphan Drug Tax Credit only applies to qualified clinical trial expenses that are incurred after the U.S. Food and Drug Administration (FDA) officially designates the drug as an "orphan," which can delay or prevent the start of clinical trials for many debilitating, rare diseases. BIO supports clarifying that the Orphan Drug Tax Credit applies to qualified clinical trial expenses for a designated orphan drug, regardless of whether such expenses were incurred before or after the product received such designation, provided that such designation has been received.

Fact Sheet on the Orphan Drug Tax Credit
Clarification Needed in the Orphan Drug Tax Credit to Accelerate Research in Rare Diseases (Apr. 11 2003)
Read the Fact Sheet

BIO Letter
Expressing strong support for the Orphan Drug Tax Credit, to Representative Kevin Brady (R-Tex) (Mar. 5, 2003)
Read the Letter

Legislation in the 108th Congress
H.R.1308: Tax Relief, Simplification, and Equity Act of 2003
Read the Bill

Orphan Drug Tax Credit Archive
Older materials on this subject are available in our archive.
Browse the Archive