BIO Calls for Reforming SBIR Program.

Current System Plagued by "Grant Hogs" Which Limits Innovation and Competition

WASHINGTON -- Today, the House Science and Technology Committee's Technology and Innovation Subcommittee will explore how the Small Business Research Innovation (SBIR) programs operate at the largest government agencies. The Biotechnology Industry Organization (BIO) has called for reform of the SBIR eligibility requirement which prevents more than half of all small private U.S. biotech companies from competing for grants to fund research that could lead to potentially life-enhancing and life-saving therapies.

BIO Executive Vice President Alan Eisenberg commended the subcommittee for reviewing the effectiveness of the program as it heads into the reauthorization process. In calling for reform, he pointed to a troubling trend in which in the absence of robust competition, a limited group of grant recipients -- "grant hogs" -- are dominating the program and receiving hundreds of grants, which is counter to the program's goals of encouraging participation and stimulating innovation.

"Today, many small biotech companies are ineligible for the SBIR grants because they receive a majority of their funding through venture capital," Eisenberg explained. "These companies, nevertheless, continue to need funding for innovative, early stage research which is critical for the development of new therapies. By excluding these small biotech companies from the SBIR program, an unbalanced and less competitive system is preventing the best science from being adequately funded."

As a result of the Small Business Administration (SBA)'s reinterpretation of the program's eligibility requirements in 2003, the applicant pool at the National Institutes of Health (NIH) for SBIR grants has been shrinking and work on life-saving and life-enhancing technology is being postponed. For example, when they became ineligible for SBIR grants, several small biotech firms had to shut down operations that were working to develop new treatments for cancer and cystic fibrosis.

In a letter to the SBA Administrator in 2005, Elias A. Zerhouni, M.D., Director of NIH, stated that limits on SBIR eligibility "unduly restrict the ability of the NIH to fund high quality, small companies." He expressed concern that the eligibility requirement "undermines NIH's ability to award SBIR funds to those applicants whom we believe are most likely to improve human health."

Patient groups have also expressed concern about the eligibility restrictions. Sixty patient groups sent a letter to leaders of the 109th Congress in support of the Save America's Biotechnology Innovative Research (SABIR) Act which would have allowed majority venture-backed biotech companies to compete for SBIR grants. In the letter, they asked Congress to "help innovative research move forward in order to foster breakthrough cures."

"More competition results in better science, which leads to better life-enhancing and life-saving products. In the end, the patients win," Eisenberg concluded.

The letter from Dr. Zerhouni to the SBA Administrator can be found at http://bio.org/tax/sbir/presskit/ZerhouniLetter.pdf.

The patient letter can be found at http://bio.org/tax/sbir/presskit/SBIRpatientLetterFINAL.pdf

About BIO

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the annual BIO International Convention, the global event for biotechnology. www.bio.org

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