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Yesterday, the House Ways & Means Committee revived discussion of legislation to restore immediate R&D expensing—we recap. Plus, Sen. Bernie Sanders’ idea for a “long COVID moonshot” is admirable—but price controls could thwart the companies already researching this disease (and others). (544 words, 2 minutes, 43 seconds) |
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Ways & Means Committee discusses need to restore R&D tax deductions |
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Yesterday, the House Ways & Means Committee discussed legislation to restore immediate R&D expensing and support American competitiveness.
The hearing: The House Ways & Means Committee revisited tax provisions in the 2017 Tax Cuts and Jobs Act (TCJA), including the full deduction for R&D expenses, which has been in the Tax Code since 1954. A 2022 change requires companies to amortize R&D expenses over five years, reducing the full deduction to 20% annually.
Why it matters: Biotech can require hundreds of millions of dollars and years of work before research pays off. Being forced to amortize R&D expenses reduces funding available for developing new drugs.
A possible solution: In January, the House passed the Tax Relief for American Families and Workers Act, which would restore full R&D expensing until 2025. Ways & Means Chair Jason Smith (R-MO), who sponsored the bill, called for Senate passage.
Competitive disadvantage: Witness Austin Ramirez said his Wisconsin company Husco relies on R&D to keep its auto components and manufacturing processes competitive. Amortizing R&D disadvantages Husco against its main competitor in China, where companies are paid to conduct R&D through a “200% super deduction.”
An immediate impact: Rep. Ron Estes (R-KS) said growth in U.S. R&D spending dropped, from an average of 6.5% per year to less than 0.5% in the last 12 months, with associated cuts in R&D jobs. “Lagging R&D growth is detrimental to our global competitiveness,” he said.
BIO has been taking action: BIO’s long-time efforts to revive the R&D deduction have included letters to congressional leaders and a BIOAction campaign to urge makers to restore immediate R&D expensing. |
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The problem with a long COVID ‘moonshot’ |
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Sen. Bernie Sanders' (I-VT) plan for a $10 billion “Long COVID Moonshot” is admirable—but companies already investing in innovation for long COVID and other diseases could be thwarted by drug price controls.
The challenge: There is still no treatment for the troubling collection of symptoms caused by long COVID, a condition with similarities to other post-infection syndromes.
Sanders’ proposal: $1 billion a year for 10 years to establish a National Institutes of Health (NIH) Long COVID Research Program, modeled after President Biden’s “Cancer Moonshot.”
The problem with moonshots: An analysis shows Biden’s Cancer Moonshot might increase the estimated 2022 cancer R&D spending of $56.8 billion by $1.9 billion, or 3.4%. But drug price controls in Biden’s Inflation Reduction Act were expected to cut cancer R&D by $18.1 billion or 31.8%.
Biotech firms are already investing in long COVID R&D, and cooperating through initiatives discussed during this webinar organized by BIO.
The importance of private investment: In 2022, industry was responsible for about 66% of U.S. investment in basic and applied biomedical R&D, while the federal government contributed 25%, with most federal research covering general areas rather than new drugs, said Hans Sauer, BIO VP for IP and Deputy General Counsel.
The bottom line: To encourage R&D in long COVID (and other diseases), stop price controls. Rather than encourage biotech investment, “we are instead now facing a massive headwind brought about by an ill-conceived drug control pricing law,” BIO CEO John Crowley told Congress. |
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President Biden’s Friday: Giving a virtual keynote address at Rev. Al Sharpton’s annual conference on racial justice, per the Associated Press.
What’s Happening on Capitol Hill: A quiet end to the week. |
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