Boston Scientific: beleaguered drug firm plans to move production out of US

Ross Moczarski, CEO of Moderna Therapeutics, has an impassioned message for US state and federal politicians who seek to extract billions in tax dollars from biotechnology firms. “Tax breaks and subsidies must be made…

Boston Scientific: beleaguered drug firm plans to move production out of US

Ross Moczarski, CEO of Moderna Therapeutics, has an impassioned message for US state and federal politicians who seek to extract billions in tax dollars from biotechnology firms.

“Tax breaks and subsidies must be made in return for productivity results,” Moczarski told Axios at BioComm, a conference on venture capital and healthcare policy in Washington, DC. “They are not free stuff.”

Why it matters: The federal government’s effort to capture as much as $20bn in biosimilars taxes over the next decade and create a new tax structure for emerging biotech firms — through a tax incentive for technology innovation — is drawing fire from states and tech firms that oppose the plans.

Current law allows pharma and biotech firms to deduct patent research and development expenses from their tax bill over a 12-year period. That tax break applies to all companies, but biotech firms would reap larger rewards because they often burn through their cash much faster than pharma.

But Republicans have proposed to reduce the tax deduction for drug research and development to 2%, compared to current levels of 7% to 9%, depending on industry. Proponents argue the change would save the government billions in the long term and would further diversify the nation’s economy.

Of more immediate concern to companies is the formula for determining taxpayer eligibility for the tax break. Once a new drug hits patent protection, the US tax code currently allows companies to apply patent tax deductions to expenses incurred prior to patent protection (these deductions are not counted toward a firm’s taxable income.)

The proposed change would require companies to apply patent tax deductions against expenses incurred after the patent protection expires, despite many drugs taking more than a decade to reach the market, since so much of drug research occurs before a company’s drug has attained patent protection.

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