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Qualifying Therapeutic Discovery Project and HHS' Determination Process: Questions and Answers

Q1. What are the types of questions that HHS can answer about the qualifying therapeutic discovery project program?

A. HHS can only answer questions that specifically pertain to its review of information provided in the Project Information Memorandum (Appendix A to Notice 2010-45) to determine whether (1) a project meets the definition of a “qualifying therapeutic discovery project” and (2) the applicant for certification from the IRS has demonstrated that its project shows a “reasonable potential” to meet one or more of the goals specified in § 48D(d)(3)(A). See Appendix A, Part II, to Notice 2010-45 for further information on the HHS interpretation of the terms used in the Project Information Memorandum.

Q2. Will dividing a qualifying therapeutic discovery project into multiple projects increase an applicant’s chances of receiving the maximum credit or grant in lieu of credit?

A. Each project will be evaluated by itself without reference to other projects.  Therefore, dividing a project into multiple projects may result in the projects not meeting the selection criteria under § 48D(d)(3). Moreover, if a research endeavor involves developing a product, such product should not be represented as multiple projects for which multiple applications are submitted. For example, an applicant should not submit derivative or multiple applications that describe:

  • the same therapeutic or diagnostic designed to treat or prevent different diseases or conditions; 
  • the same molecular diagnostic to guide therapeutic decisions related todiseases or conditions; or
  • the same product, process, or technology to further the delivery or administration of related or similar therapeutics.

Q3. Is a credit or grant in lieu of credit only available for devices that deliver/administer drugs? If so, are there any plans to implement a credit for companies developing medical devices that do not deliver/administer “therapeutics”?

A. A medical device designed to diagnose diseases or conditions could qualify as a qualifying therapeutic discovery project (see question 2 in the Project Information Memorandum). In addition, a device designed to determine molecular factors related to diseases or conditions (a molecular diagnostic device) to guide therapeutic decisions could qualify (see question 3 in the Project Information Memorandum).

Question 4 in the Project Information Memorandum focuses on the requirement of § 48D(c)(1)(C). To qualify under question 4, a product, process, or technology must further the delivery or administration of therapeutics. For the purposes of § 48D(c)(1)(C), the term “therapeutics” means drugs or medical devices, as those terms are defined in Section 201(g) and (h) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 321(g) and (h). Biologics that are licensed under the Public Health Service Act (PHSA) will generally be either drugs or medical devices. Thus, a drug-eluting stent or infusion pump would be an example of a product that furthers the delivery or administration of a drug and would meet the requirements of this provision. However, a medical device, or other product, process or technology that does not further the delivery or administration of a drug or medical device would not meet the requirements of this provision because such products do not deliver or administer a therapeutic within the meaning of § 48D(c)(1)(C). The term “therapeutic” is narrower than the term “therapy,” which appears elsewhere in § 48D. Therefore, products, processes or technologies that deliver other therapies which are not therapeutics, such as speech, physical, and cognitive therapies, would for the same reasons be excluded. 

A non-diagnostic medical device may be a “qualifying therapeutic discovery project” if such project is designed to “further the delivery or administration of therapeutics.” An applicant seeking certification for a non-diagnostic medical device will need to explain how the product furthers the delivery or administration of a drug or device.

Any credit or grant for products not currently included in § 48D would require that Congress pass new legislation.

Q4. In evaluating applications, will there be any competitive advantage for applicants that file early during the window for submitting applications?

A. No. HHS will review the information provided by the applicant in the Project Information Memorandum in order to determine whether a project meets the definition of "qualifying therapeutic discovery project" and whether the applicant has demonstrated that its project shows a "reasonable potential" to meet one or more of the goals specified in § 48D(d)(3)(A).

Q5. In the Appendix A examples provided in the discussion of Project Information Memorandum, both medical devices administer drugs.  However, there are other therapeutics that are not drugs, such as stereoscopic and radioscopic therapies. Are devices that administer radioscopic and/or stereoscopic therapies qualifying medical devices?

A. A non-diagnostic medical device may be a “qualifying therapeutic discovery project” if such project is designed to “further the delivery or administration of therapeutics.” For the purposes of § 48D(c)(1)(C), the term “therapeutics” means drugs or medical devices, as those terms are defined in Section 201(g) and (h) of the FFDCA, 21 U.S.C. 321(g) and (h). Biologics that are licensed under the PHSA will generally be either drugs or medical devices. However, a medical device, or other product, process or technology that does not further the delivery or administration of a drug or medical device would not meet the requirements of this provision because such products do not deliver or administer a therapeutic within the meaning of § 48D(c)(1)(C). The term “therapeutic” is narrower than the term “therapy,” which appears elsewhere in section 48D. Therefore, products, processes or technologies that deliver other therapies which are not therapeutics, such as speech, physical, and cognitive therapies, would for the same reasons be excluded. 

Consistent with this guidance, non-diagnostic devices that are used to deliver “therapy,” but not “therapeutics,” would not meet the statutory definition of a qualifying therapeutic discovery project. An applicant seeking certification for a non-diagnostic medical device will need to explain how the product furthers the delivery or administration of a drug or device.

Q6. How will projects be reviewed by HHS?

A. Applications will initially be reviewed by HHS to determine whether or not they meet the definition of "qualifying therapeutic discovery project" (see questions 1-4 in the Project Information Memorandum), and whether they show a reasonable potential to meet the statutory goals (see questions 5-8 and 9-11 in the Project Information Memorandum). The reviews will be accomplished by reviewers coordinated by the National Institutes of Health. All applications that are considered, based on that review, to cover qualifying therapeutic discovery projects that show a reasonable potential under § 48D(d)(3)(A) will be considered by the IRS as it makes its determination whether the requirements under § 48D(d)(3)(B) are satisfied.

Q7. Questions 1-4 of the Project Information Memorandum ask whether the project is designed for particular purposes. If the project may have multiple purposes, some of which would not qualify (e.g., a product that could be used to further the administration of a drug or device but would also have other uses), must the statutory purpose be the sole purpose, the primary purpose, or simply one of several potential purposes in order to justify a ‘Yes” answer ?

A. While the statutory purpose (i.e., the purpose identified in the response to questions 1-4) need not be the sole potential use of the project, it must be the primary purpose, i.e., the purpose for which the project was designed.

Q8. Are figures allowed in the responses to Questions 9 and 10 of the Project Information Memorandum that will be reviewed by HHS? If so do they count in some way against the 250 word count limit?

A. No. Figures, tables, charts, graphs, etc. are not allowed in any of the responses, including Questions 9 and 10, of the Project Information Memorandum. Applicants are to provide only text in accordance with the specified word limitation.

Q9. The first sentence of this paragraph reads; "For each of questions 9. 10. and 11 provide a short statement, not to exceed a total of 250 words, including responses to bulleted items." Does this mean that applicants are given 250 words for each question, or a total of 250 words for all questions? 

A. Question 9 is limited to 250 words. However, note that the list of literature citations (5 maximum) is excluded from the 250-word limit. Question 10 is limited to 250 words, and applicants should include the following information within that 250 word description:

  • If the project involves the development of a product that is regulated by the Food and Drug Administration, an explanation of whether an investigational new drug application or an investigational device exemption has been filed with the Food and Drug Administration, and whether an application for approval, license, or clearance has been filed, and, if so, the status of that application as of the date the applicant files its application.

  • If the project does not involve the development of a product that is regulated by the Food and Drug Administration, information about any regulatory reviews or approvals that have occurred.

  • If the project involves preclinical testing, a description of the testing completed and/or contemplated.

  • If the project involves testing in humans, information about the phase(s) of the testing that has been completed and the number of subjects tested in each phase and information about trials for which the applicant is actively recruiting subjects. Summarize the results of the trails, noting any failed trials or successful trials.

  • The planned research and development strategy for the test or treatment being researched and a summary schedule for development of the project, including timelines and milestones planned and completed.

Question 11 is limited to 250 words. Applicants should include the following information within that 250 word description:

  • A statement of the revenue levels and sources for this project over the past three years.
  • A statement of the revenue levels and sources for the proposed research and development plan delineated in response to question 10.
  • A description of any significant public or private investment, such as by venture capitalists, in the development or commercialization of the project.
  • A description of any strategic partnerships for the development or commercialization of the project.
  • A statement of whether the applicant has suspended operations for the project and, if so, whether the suspension is temporary or permanent. If the project has been suspended, terminated, or is otherwise inactive, explain why, including whether the cause is a lack of financial resources or other reasons.

Q10. Who do I contact with questions I have about the Project Information Memorandum that will be attached to the Form 8942?

A. For further information regarding the Project Information Memorandum, please contact JoAnne Goodnight, Department of Health and Human Services (HHS), at QTDP@mail.nih.gov

 

 

 

Page Last Reviewed or Updated: 14-Mar-2014