Pharmaceutical, biotechnology, and other healthcare companies with 250 or fewer employees may be eligible to take advantage of a new tax credit and grant program included as part of the Patient Protection and Affordable Care Act of 2010 signed into law on March 23, 2010. The Act added new Section 48D to the Internal Revenue Code, which outlines the qualifications and standards for eligibility under a program referred to as the therapeutic discovery project tax credit and grant program. A total of $1 billion is available under the discovery program for certain costs incurred or paid by eligible companies in taxable years beginning in 2009 and 2010 in connection with qualifying therapeutic discovery projects.
The tax credit is equal to 50 percent of the amount of certain costs incurred or paid in connection with a qualifying project by an eligible company. Eligible companies that do not currently have taxable income may elect to receive a direct cash grant in lieu of the tax credit in an amount equal to 50 percent of these costs. The discovery program will be managed by the U.S. Secretary of the Treasury and presents a significant financial opportunity for a number of pharmaceutical, biotechnology, and other healthcare companies.