Can we restore the R&D tax deduction?

With a new bipartisan proposal to restore the full R&D tax deduction on the table, now’s the time for you to take action—we tell you how. Plus, five takeaways from BIO’s participation in JPM Week. (599 words, 2 minutes, 59 seconds)

Bipartisan proposal would restore R&D tax deduction

A bipartisan proposal to restore the full tax deduction for R&D was announced yesterday by House Ways and Means Chair Jason Smith (R-MO) and Senate Finance Chair Ron Wyden (D-OR).

The proposal: R&D spending would be fully tax deductible through 2025 under the plan—part of a wider tax proposal that includes an expansion of the Child Tax Credit and several other family- and business-friendly measures.

Why it’s needed: The law recently changed to amortize R&D expenses over five years, meaning companies can only deduct 20% per year for spending on innovation. 

Why it matters: R&D-intensive industries like biotech can require hundreds of millions of dollars and years of work before research pays off. Being forced to amortize these expenses means less deduction to offset any tax liability. Even very small companies are being hit with a surprise tax bill.

BIO has been taking action—launching a BIOAction campaign to support the restoration of full R&D deductions adding to the ongoing efforts that BIO has been promoting the return of the full deduction.

What they’re saying: Sen. Maggie Hassan (D-NH), who is helping lead the effort on a BIO-backed bill to restore the deduction and worked on yesterday’s proposal, said: “The bipartisan deal we have reached to restore the R&D tax deduction and provide a tailored expansion of the child tax credit will help drive innovation here in America and help children and families thrive.”

What’s next: Wyden and Smith said they want to pass the measure before 2024 tax filing opens on Jan. 29, which means getting their House and Senate colleagues onboard. 

Now’s the time to take action. Join the BIOAction fight to support full R&D exemptions.

5 takeaways from JPM Week

BIO was on the scene at the J.P. Morgan Healthcare Conference in San Francisco last week—here are five things we learned.

1. Obesity drugs help patients and industry. GLP-1 agonists—Ozempic, Victoza, Wegovy, and Saxenda—are scientific successes and a strong case for boosting biotech investment.

2. We can’t ignore AI. Novartis and Eli Lilly announced a $82.5 million deal to employ Isomorphic Labs’ AI technology to design small molecule drugs. The Mayo Clinic announced a multimillion-dollar plan to develop an AI model to create new value from existing data.

3. Partnering was in full force. BIO’s One-on-One Partnering^TM system to help partners with matching needs find one another recorded nearly 6,000 meetings. The partnering continues after JPM Week next month at the BIO CEO & Investor Conference.

4. The Inflation Reduction Act (IRA) is already chilling innovation. Speaking on a panel, BIO Chief Policy Officer John Murphy surveyed the law’s impact and called for broader price control exemptions for orphan drugs, with measures like the proposed ORPHAN Cures Act.

5. Despite everything, 2024 looks promising. Continued favorable M&A is anticipated. Expect election-year talk of policies negatively impacting the industry, but mostly from “politicians saying things that they think will generate support for their candidacy, not necessarily things that they can do or will do,” BIO Chair Dr. Ted Love said on a STAT News panel.

What they’re saying: “Politically, we should be prepared for significant headwinds, mostly around rhetoric, and I would encourage people not to overreact to that, because I think that stuff is really going to be more for television and for voters than for actual substance,” said Dr. Love.

Read more at Bio.News.

President Biden’s Wednesday: Meeting Congressional leaders to discuss national security spending that includes aid to Israel, Ukraine, Taiwan, and the U.S. southern border with Mexico, as well as changes to border and immigration policy, per CNN.

What’s Happening on Capitol Hill: After the Senate advanced legislation for a continuing resolution to maintain federal spending, work continues this week on a short-term spending deal to avert a shutdown, per CBS News.