Medical research will get a boost from the Obama administration’s proposed stimulus package that creates a permanent research and experimentation (R&E) tax credit for companies that carry out research-and-development (R&D) activities in the United States. Under the proposal, R&E tax credits would total as much as 20 percent, with $100 billion allocated over 10 years to qualifying research firms.  According to President Obama, he will pay for the tax breaks by ending loopholes that let companies benefit financially by moving jobs and R&D overseas.

Medical device manufacturers’ lobbyists claim it’s too early to determine how much the R&E tax credits will promote product innovation and create new jobs.  The Advanced Medical Technology Association, however, applauded the move.  Bret Loper, senior executive vice president government affairs, said “AdvaMed has long supported making the R&D credit permanent.  We look forward to seeing the details of this new proposal and the other tax changes being discussed today to determine how they will affect America’s medical technology companies.”

The National Venture Capital Association, which recently started the Medical Innovation & Competitiveness Coalition, counters that the new initiative will primarily benefit large companies rather than start-ups.  “What our experience has been is that if a company is not profitable and paying taxes, they wouldn’t be eligible” for the tax credits, said Emily Mendell, the association’s spokesman.