Washington Editor

WASHINGTON - A proposal to partially restore SBIR funding to venture capital-owned biotech companies is on its way to the Senate floor after a committee cleared the measure Thursday.

An amendment attached to legislation to reauthorize the Small Business Administration would permit up to 25 percent of Small Business Innovation Research funds for companies in which venture capital firms have a controlling interest.

That's a compromise to a bill introduced by Sen. Kit Bond (R-Mo.), who originally proposed in the Save America's Biotechnology Innovative Research Act (S. 1263) that such companies should be eligible for all SBIR funds. But at a hearing of the Senate Small Business and Entrepreneurship Committee, he acknowledged that the concession is "acceptable to the majority."

The issue has arisen in recent years after a reinterpretation of eligibility requirements excluded majority venture capital-backed companies from receiving the grants, even though that previously had not been the case. That change hurt many biotech companies, which found an ally in Bond. Noting that the industry "is like no other in the world" because of its capital-intensive needs far before returns on those investments, he backed legislative language to restore SBIR eligibility to biotech companies with majority venture backing. A companion bill in the lower chamber, H.R. 2943, has been introduced by Rep. Sam Graves (R-Mo.) and remains under committee consideration. (See BioWorld Today, June 20, 2005, and July 28, 2005.)

"We're supportive of the [Senate] compromise," Alan Eisenberg, the Biotechnology Industry Organization's executive vice president for emerging companies and business development, told BioWorld Today. He added that the Washington trade association "looks forward" to advancing the matter through the remaining legislative process.

The committee readily adopted Bond's amendment, despite a bit of dissent from Ranking Member John Kerry (D-Mass.), and unanimously forwarded the reauthorization measure for a full Senate vote. Committee Chair Olympia Snowe (R-Maine), who called the SBIR program "invaluable," was pleased with the compromise.

But Kerry, who was quick to acknowledge his large biotech constituency in the Bay State, nonetheless expressed dissatisfaction with ensuring SBIR funds reach those that are 51 percent or more owned by venture capitalists. Noting that "the small business community doesn't like this," he suggested an alternative: a biotech-specific grant program to be administered by the National Institutes of Health, separate from the SBIR system.

In his criticism, he cited a relatively recent analysis from the Government Accountability Office that found that venture capital-backed biotech firms have been receiving an increasing share of SBIR grants: In 2004, they were awarded 22 percent of total funds from the program, up from 14 percent in 2002. But the report failed to specify whether those companies had majority or minority venture capital support. (See BioWorld Today, April 25, 2006.)

Moving forward, the Small Business Administration reauthorization bill and Bond's compromise language must pass a full Senate vote, be reconciled with the House bill and signed by President Bush before it becomes law.

NIH Seeks Added Fiscal Support

With the National Institutes of Health slated for little in the way of a budget increase next year, Director Elias Zerhouni has been making the case for more significant funding.

Addressing members of the Congressional Biomedical Research Caucus and the Joint Steering Committee for Public Policy at the Capitol last week, he pointed to the need to sustain the research agency's recent budget growth. In the past several years, it has doubled to about $28 billion, equal to nearly $95 for every American.

"A key challenge for our country is the fast-growing cost of health care," Zerhouni said, noting that today's medicine would prove futile in reining in those expenses a decade from now. "We will need to make new discoveries."

Nearly two-thirds of NIH-supported research is in discovery. It disperses 85 percent of its annual budget to outside researchers and projects, funding more than 200,000 scientists nationwide. But Zerhouni said Congress must recognize that the NIH needs "a larger base of knowledge" in addition to "more scientists" to combat evolving public health challenges caused by the nation's aging population, increases in chronic conditions, emerging and re-emerging diseases and biodefense needs.

The Senate Appropriations Committee recently approved $28.6 billion in funding for the NIH next year. While that represents $200 million more than Bush proposed as part of next year's federal budget, and about $300 million more than the House Appropriations Committee approved, it still amounts to lost funding when adjusted for inflation.

"This is not a subsidy," Zerhouni said, later cautioning that "nothing will happen if we don't make the discoveries."

FDA To Provide More Advisory Info

The FDA is working to make its advisory committee processes more transparent, according to plans unveiled earlier this week. Those efforts are aimed at continuing to provide timely and independent scientific advice to reviewers at the agency, while also reassuring the public about the basic integrity of this process.

Critics have charged that committee members' ties to the drug industry create conflicts of interest, although Scott Gottlieb, the FDA's Deputy Commissioner for Medical and Scientific Affairs, noted in prepared remarks for a recent speech that its advisory process "is the most open and transparent in the world, bar none." He pointed out that European and Canadian advisory committee meetings are closed-door affairs, unlike the FDA's public gatherings.

Still, Gottlieb cautioned against a chilling effect if some current legislative proposals related to advisory committees become law. "It would be a significant step backward if our primary criterion for selecting members to our committees becomes their lack of private sector work if we exclude people for deep experience rather than embrace them for it."

Going forward, the agency plans to clarify its process for granting conflict-of-interest waivers, as well as when those waivers would be publicly disclosed. The FDA also plans to implement a more streamlined approach to the appointment of members to its drug-related advisory committees.

"The value of the advisory committee process is measured most of all by the quality of the people who serve on these panels," Gottlieb said.