109th Congress

Save America's Biotechnology Innovative Research Act

H.R. 2943/S. 1263

Background

The Small Business Innovation Research (SBIR) grant program at the National Institutes of Health (NIH) and similar programs at other Federal agencies provide an important funding source for U.S. small businesses that help transform scientific knowledge into tangible benefits for public health. However, because of the time and expense involved in taking a new product from idea to the market, small businesses may also need additional funding sources, including venture capital. Small biotechnology companies can leverage their NIH SBIR awards with venture capital funding in order to support breakthrough technologies in fields such as gene therapy, proteomics, and pharmaceutical development.

A 2002 NIH SBIR survey revealed that 37 percent of Phase II awardees with ongoing NIH SBIR projects who were realizing sales from those projects had received additional non-SBIR funding or capital, and 30 percent had not. This difference of 23 percent highlights the significant advantage that leveraged sources of venture capital support provide to small businesses that are furthering the mission of NIH and benefiting public health.¹

In December 2004, the Small Business Administration (SBA), which determines eligibility for NIH and other Federal small business grant programs, issued a rule that expanded eligibility criteria to allow participation in SBIR programs by a small business concern that is at least 51-percent owned by another small business concern (e.g., a venture capital company) that is 51-percent owned by individuals who are citizens or permanent resident aliens of the United States. The small business, together with its affiliates, must still meet the 500-or-less employee size standard. The Small Business Technology Transfer Research Program program is not affected by this change.

Following the December 2004 SBA program policy rule described above, a number of past SBIR awardees have been deemed ineligible for future SBIR competition.

Provisions of the Legislation/Impact on NIH

H.R. 2943 and S. 1263 would have broadened eligibility requirements for business concerns applying for awards under SBIR programs, including the NIH SBIR program.

Status and Outlook

H.R. 2943 was introduced by Representative Sam Graves (R-MO) on June 16, 2005, and was referred to the House Science Subcommittee on Environment, Technology and Standards. No further action occurred on this legislation during the 109th Congress.

S. 1263 was introduced by Senator Christopher S. “Kit” Bond (R-MO) on June 16, 2005, and was referred to the Senate Committee on Small Business and Entrepreneurship. No further action occurred on this legislation during the 109th Congress.

¹Of the original 768 participants, 67 percent reported commercialization success (sales). Of those, 37 percent (284) reported that they had received outside investment, and 30 percent (230) reported that they had not received outside investment. The difference between the two groups is 23.47 percent.