Bill Would Restore Small Business Funding for Medtech Firms

Medtech manufacturers, industry associations, patient advocacy groups, and healthcare fundraising organizations are calling on Congress to pass the Save America’s Biotechnology Innovative Research Act (SABIR), which would ensure the availability of small business innovation research (SBIR) grants to smaller, innovative companies that are often on the vanguard of new developments in medical technology and the life sciences.

Recent changes in the interpretation of SBIR eligibility requirements by the Small Business Administration (SBA; Washington, DC) prevents firms from participating in the program if they receive more than 51% of their funding in venture capital. SABIR would effectively nullify this provision and restore the previous funding eligibility criteria for SBIR grants, which are sponsored by the National Institutes of Health (Bethesda, MD).

Bond and Graves: Ensuring small business support.

SABIR, introduced in June, was cosponsored by Senator Kit Bond (R–MO) and Representative Sam Graves (R–MO). It has since been referred to the Senate Committee on Small Business and Entrepreneurship, chaired by Olympia Snowe (R–ME), where it remained at press time.

Last month, more than 60 organizations rallied in support of SABIR at a Capitol Hill news conference organized by the Biotechnology Industry Organization (BIO; Washington, DC). At the same time, the organization submitted a letter urging quick passage of the bill to Congress leaders. “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.

Expressing a sense of urgency and citing the need for change, Senator Bond said, “ We have to get back on track. We can no longer afford to stifle innovation.” Representative Graves concurred, adding, “This change is essential for many small businesses that are trying to do big things. It ensures that small businesses that need venture capital are not penalized.”

The SBA has long required that SBIR applicant companies have fewer than 500 employees and be 51% owned by one or more “individuals.” However, the agency recently reinterpreted the term “individuals” to mean actual persons, thereby excluding funding from venture capital firms. Although the SBA has since adjusted some of the regulatory language, critics say the changes do not begin to address the problem and would still deny SBIR eligibility to many medical device, biotech, and other life sciences companies.

Stephen Ubl, president of industry association AdvaMed (Washington, DC) emphasizes the importance of SBIR grants to the medtech industry. “Without these grants, many early-stage companies are unable to proceed with developing the next generation of medical technology innovations,” he says. “Many breakthrough medical technologies—from innovative heart pumps to new diagnostic tests to implantable monitors—emerge from small, start-up companies, which are dependent on the help of venture financing.”

“We need to reward companies making high-risk, high-gain investments in medical research,” says Greg Simon, president of FasterCures/The Center for Accelerating Medical Solutions (Washington, DC). “Instead, we’re punishing small companies that are doing important and innovative research simply because of the way they are funded. Congress should move quickly to pass the SABIR Act and ensure these companies are once again eligible for SBIR grants.”

© 2005 Canon Communications LLC

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