Believe it or not, healthcare reform law benefits medical devices

Medical device firms have good reason to dislike the healthcare reform law. You would, too, if Uncle Sam taxed you $20 billion to pay for it.

The industry warned the tax would crush innovation, especially for startups that can’t afford it. But tucked away in the law is a little-known tax credit designed to help those very companies.

The $1 billion Qualifying Therapeutic Discovery Project tax credit initially was supposed to help drug companies (perhaps a reward for pharma support of the reform law?) develop therapies that:

• treat areas of unmet medical need, or prevent, detect or treat chronic or acute diseases and conditions,
• Reduce the long-term growth of healthcare costs in the United States, or
• Significantly advance the goal of curing cancer within 30 years.

One billion dollars is nothing to sneeze at, and with early stage capital hard to find, the program should provide a much needed boost to the country’s biomedical industry.

Only companies with 250 employees or fewer can receive up to $5 million in credits. Startups with no tax liabilities can receive a maximum $244,000 grant.

The government already has doled out at least $17 million to 32 companies, according to Genetic Engineering & Biotechnology News.

The tax credit also acts as a stimulus for “projects that show the greatest potential to create and sustain high-quality, high-paying jobs in the United States, and to advance our competitiveness in the fields of life, biological and medical sciences.”

That’s awfully broad, so why shouldn’t medical device firms get some love? And some did.

MedCity News has learned that Pursuit Vascular Inc. in Blaine, Minnesota, has won a grant. The company, which won the biosciences category of last year’s Minnesota Cup, is developing a disposable catheter to prevent device-related blood infections, which it says costs Medicare $1.5 billion a year. Pursuit Vascular, which spun off from incubator Pursuit Medical Inc., also is LifeScience Alley’s New Technology Showcase winner.

I know of another University of Minnesota-related startup that won a $244,000 grant, but the company did not want to be identified.

Winners were just announced, so don’t be surprised to see more good news trickle in.