The landmark healthcare legislation Congress passed in March 2010 promises to boost research and innovation, but paying for those programs may mean medical device manufacturers take a hit to their bottom lines (see sidebar "Paying for reform"). The more than 2000-page "Patient Protection and Affordable Care Act" offers new sources of funding for researchers and small- to medium-sized R&D firms. Among the provisions to assist R&D is a tax credit for companies that develop technologies or techniques to diagnose, treat, or prevent disease. Other initiatives support comparative effectiveness research and give the green light to the Cures Acceleration Network (CAN), a program to rapidly translate innovative laboratory research to clinical settings.
Helping small R&D
The Qualifying Therapeutic Discovery Project tax credit, championed by Sen. Robert Menendez (D-NJ), is aimed at companies with fewer than 250 employees. These businesses can claim up to 50% of R&D expenses related to:
- Treating or preventing diseases/conditions by conducting preclinical activities, clinical trials, and clinical studies, or carrying out research protocols, to secure approval by the U.S. Food and Drug Administration;
- Diagnosing diseases/conditions or developing diagnostics based on the molecular activity associated with a disease/condition that would help guide therapeutic decisions; or
- Developing a product, process, or technology to further the delivery or administration of therapeutics.
Making reference to molecular diagnostics in the legislation suggests Congress is getting the message about the new paradigm of personalized medicine and bodes well for optical technologies.
The tax credit also permits companies to apply for a grant in lieu of the credit. This option could be beneficial to early-stage companies that may not have taxable income that can be offset by a credit. The program is expected to get underway by the end of May 2010.
Over the last five years comparative effectiveness research has been hotly debated. The recent stimulus funding awarded to the National Institutes of Health (NIH) included provisions to identify which procedures, technologies, and services provide the best patient outcomes. The healthcare reform legislation now establishes the Patient-Centered Outcomes Research Institute (PCORI) to examine an array of services and procedures to determine which ones work best at preventing, diagnosing, and treating disease.
The PCORI will develop a national research agenda based on a number of factors including disease prevalence and the potential for new evidence that might improve patient health. Expert advisory panels drawn from academia, government, and industry will assist in clinical trial design and supply technical support in the case of device studies. By 2015 PCORI's budget is expected to top out at $600 million a year.
Jennifer K. Barton, director, division of biomedical engineering at the University of Arizona, sees inclusion of comparative effectiveness in the healthcare legislation as a boon for laser medicine. "Especially in emerging areas, the healthcare bill will motivate large-scale serious studies comparing different approaches." She cites a recent pilot study in which photobiomodulation, a technique that uses low-level light to moderate pain, stimulate nerves, and heal wounds, was found to be less costly and had fewer side effects than drug therapy.
Turning discoveries into therapies
The Cures Acceleration Network (CAN), first introduced by Sen. Arlen Specter (D-PA) in 2009, could turn out to be a bonus for researchers and advocacy groups. CAN will award grants through NIH to biotech companies, universities, and patient advocacy groups to bridge the gap between basic scientific discoveries and their application as clinical therapies.
Through CAN, the federal government will pursue more high-risk, high-reward research and should be able to move that research to clinical trials and patients more quickly than through traditional mechanisms. CAN projects will also get fast-track treatment through the FDA approval process. The legislation calls for an oversight board that includes key stakeholders from medicine, medical instrumentation, basic research, pharmaceuticals, patient advocacy organizations, and agencies outside of NIH. To support CAN, Congress has authorized $500 million, with a ceiling for individual project awards set at $15 million.
Now that the debate and political posturing has quieted, the work of implementing healthcare reform begins. The legislation describes very specific timeframes for initiating programs and in some cases eliminating them. The reforms discussed in this article do have the potential to improve patient care. However, as with many big-ticket programs (think Superconducting Supercollider) that Congress authorizes, over time the costs are often too great to sustain and the benefits are never realized.
–Susan M. Reiss
Paying for reform