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Patients, Industry and Lawmakers Seek to End SBA Bureaucratic Roadblock to New Medical Research

Posted on: Wednesday, 9 November 2005, 12:00 CST

WASHINGTON, Nov. 9 /PRNewswire/ -- Sixty patient, health and biotech groups today urged Congress to pass legislation that reverses a Small Business Administration (SBA) decision which has discouraged and halted new medical research.

In a letter, delivered to the leaders of Congress, the groups call for passage of (S.1263 and H.R. 2943) "Save America's Biotechnology Innovative Research (SABIR) Act," introduced by Sen. Kit Bond (R-MO) and Rep. Sam Graves (R-MO), which restores the eligibility for Small Business Innovation Research (SBIR) funding grants to biotechnology companies. The letter was released at a Capitol Hill press conference sponsored by the Biotechnology Industry Organization (BIO). (See below.)

"This letter is the voice of millions of individuals facing devastating and chronic diseases whose best chances for new therapies are associated with the type of research that the SBA bureaucracy has blocked," said Jim Greenwood, BIO's president and CEO.

"This legislation is needed to eliminate the regulatory interpretation that is stifling promising research that could improve the health and lives of people living with many diseases including HIV, lupus, diabetes, leukemia, Alzheimer's and West Nile virus," Greenwood added.

Katy Anderson, a Chevy Chase, Md. mother of three who survived cancer due to Rituxan therapy, shared her story at BIO's press conference. Rituxan was developed by IDEC Pharmaceuticals Corp., once a small biotech firm that received several SBIR grants. (IDEC and Biogen Inc. merged in 2003 to create Biogen Idec, Inc.)

"I'm not a politician, research scientist or physician. I'm a cancer survivor who is alive today because of Rituxan," Anderson said.

Rituxan has roots within a small company that needed SBA funding to validate research in order to attract large investments necessary to fund expensive late-stage development costs.

"I support SBA funding that leads to life-saving drugs," Anderson concluded.

Suzanne R. Pattee, vice president of public policy and patient affairs at the Cystic Fibrosis Foundation, said, "We support this legislation so that all small biotech companies will be eligible to apply for SBIR grants from National Institutes of Health (NIH).

"Patients with rare diseases, such as cystic fibrosis, often rely on small biotech companies to develop new treatments to save their lives. If biotech research that is validated by private equity investors' support remains ineligible for SBIR grants, promising research will grind to a halt. Patients, not just companies, would suffer the consequences," said Pattee, herself a 42-year-old cystic fibrosis patient.

More than two years ago, Intronn Inc., a Gaithersburg, Md.-based company had to stop development of a cystic fibrosis RNA therapeutic after the government pulled its SBIR funding on learning that the firm had venture capital backing.

"The current SBIR rules hit hardest at small companies that are developing treatments for disease. The American public is best served by letting the experts decide the most innovative new technologies," Dr. Gerard McGarrity, Intronn's president and CEO, said.

In a June 2005 letter to Hector Barreto, SBA administrator, Elias Zerhouni, NIH director, indicated that the eligibility standards are unduly restricting the ability of the NIH to fund high quality, small companies. "As a result, NIH must turn away many deserving applicants, and the goals of the SBIR program are being underminded," Zerhouni said. The NIH awards and administers SBIR grants, while the SBA maintains general oversight of the SBIR program.

Under the SBA's interpretation of eligibility requirements for SBIR grants, companies that are 51 percent owned by a group of private investors no longer qualify. This interpretation is a departure from the eligibility assessment used in the first 21 years of the program. One-third of biotech companies which have brought drugs to market had received SBIR funding at some point.

Most small and emerging biotechnology companies, which are years away from owning revenue-generating drugs or biologics, must look to private equity firms for investments to fund the very high-cost preclinical and clinical research. These small companies are the ones that take risks and develop breakthrough research that leads to revolutionary treatments and therapies.

In a statement, David Duncan, president and CEO of St. Louis-based Chlorogen Inc., said, "It's ironic that when the news is filled with stories of the flu and pandemics, our firm has had to shelve its bio-defense vaccine program which could potentially deliver massive quantities of vaccines against anthrax, cholera and other afflictions. Why? Because under the current rules of SBA, our firm of only 12 employees is no longer a 'small' business," Duncan said.

For more information on the issue, visit BIO's SBIR webpage at http://www.bio.org/tax/sbir/.

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products.

Put Patients Before Bureaucracy November 9, 2005 The Honorable J. Dennis Hastert The Honorable Bill Frist The Honorable Nancy Pelosi The Honorable Harry Reid U.S. House of Representatives U.S. Senate Washington, DC 20515 Washington, DC 20510

Dear Speaker Hastert, Majority Leader Frist, Minority Leader Reid and Minority Leader Pelosi:

With time running out on this session of Congress, we call on you to help eliminate a regulatory interpretation stifling promising research that could improve the health and lives of people suffering from many diseases. As 60 patient groups, medical health advocates, biotechnology and medical device organizations, we urge you to pass and make law the "Save America's Biotechnology Innovative Research (SABIR) Act" (H.R. 2943 & S.1263) before Congress completes its 2005 legislative business. The bipartisan SABIR Act, authored by Congressman Sam Graves and Senator Kit Bond, is critically necessary in order to restore the eligibility for Small Business Innovation Research (SBIR) grants to majority venture capital-backed biotechnology and medical device companies that provide promise and hope for millions of American patients.

Under the SBIR program, federal research and development grants are awarded to small-business applicants. Unfortunately, recent changes in the Small Business Administration's (SBA) interpretation of eligibility standards for SBIR grants now disqualify many start-up biotech and medical device companies. Specifically, SBA regulations require that, to be eligible for a grant, a small company must be at least 51 percent owned by one or more "individuals." The SBA has recently re-interpreted "individuals" to exclude venture capital, thereby disqualifying many bioscience and device companies from receiving these important grants. For the first decades of the SBIR program, the term "individuals" was interpreted to allow venture capital backed biotech and device companies to participate in the SBIR program. Only recently has this interpretation changed.

U.S. biotech and medical device companies are working to develop drugs, vaccines, diagnostics and devices that target more than two hundred diseases, including various cancers, heart disease, Alzheimer's disease, diabetes, multiple sclerosis, AIDS, arthritis and a whole host of rare diseases. Many of these companies use the SBIR program to provide critical early-stage funding for innovative research and development (R&D). These small companies are the ones that take significant risks and develop the breakthrough research that leads to the "miracle" treatments we have come to expect from the medical technology revolution. It must be understood, however, that SBIR grants in no way sustain emerging biotech or device companies over the course of the 10 to 15 years of development required to bring a product to market. Most biotech and device companies must rely heavily on outside investors, primarily venture capital, in order to sustain their R&D efforts.

Although recent regulatory action by the SBA to clarify the issue of affiliation sought to allow participation of some companies majority owned by other entities, it does not address the fundamental obstacle to participation of small biotech and device companies in the SBIR program. Given the critical role SBIR grants play in helping emerging biotech and device companies, it is imperative that Congress intervene.

In closing, your leadership is needed now to help innovative research move forward in order to foster breakthrough cures. On behalf of America's patients, medical technology and biotechnology, we urge you to pass the bipartisan SABIR Act (H.R. 2943 & S.1263) in both the U.S. House and U.S. Senate before Congress wraps up business for 2005 so the President can sign it into law.

Respectfully, AdvaMed AIDS Vaccine Advocacy Initiative Alliance for Aging Research Alpha-1 Foundation American Autoimmune Related Diseases Association American Federation for Aging Research American Gastroenterological Association The Amytrophic Lateral Sclerosis Association Arizona BioIndustry Association Association of American Medical Colleges BIOCOM BioGroup of Rhode Island Tech Collective BioIdaho Biotechnology Council of New Jersey Biotechnology Industry Organization C3: Colorectal Cancer Coalition California Healthcare Institute Children's Tumor Foundation Christopher Reeve Paralysis Foundation Colorado BioScience Association Crohn's & Colitis Foundation of America Cystic Fibrosis Foundation Donald Danforth Plant Science Center Faster Cures Genetic Alliance Georgia Biomedical Partnership Hawaii Life Science Council Huntington's Disease Society of America Illinois Biotechnology Industry Organization Infectious Diseases Society of America Institute for the Study of Aging Iowa Biotechnology Association Juvenile Diabetes Research Foundation Kansas City Life Science Institute Kidney Cancer Association Leukemia & Lymphoma Society Marti Nelson Cancer Foundation Massachusetts Biotechnology Council Muscular Dystrophy Association National Alliance for the Mentally Ill National Multiple Sclerosis Society National Organization for Rare Disorders New York Biotechnology Association North Carolina Biosciences Organization Omeris Palmetto Biotechnology Alliance Parkinson's Action Network Puerto Rico Industry University Research Consortium Research!America RetireSafe Society for Women's Health Research SMA Foundation St. Louis Coalition for Plant and Life Sciences Technology Council of Maryland Tennessee Biotechnology Association Texas Healthcare & Bioscience Institute Us TOO International Prostate Cancer Education and Support Network Utah Life Science Association Washington Biotechnology & Biomedical Association Wisconsin Biotechnology and Medical Device Association

Biotechnology Industry Organization

CONTACT: Kim Coghill of the Biotechnology Industry Organization,+1-202-962-9200

Web site: http://www.bio.org/

Source: PRNewswire

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