Medical Device Daily Washington Writer

Legislation introduced earlier this month by Sens. Mary Landrieu (D-Louisiana) and Olympia Snowe (R-Maine) to reauthorize the Small Business Innovation Research and the Small Business Technology Transfer programs was quickly passed last week by the Senate Committee on Small Business and Entrepreneurship.

Those programs fund more than $2 billion annually in early-stage R&D projects at small technology companies, including life sciences companies. If not reauthorized, the SBIR program will sunset July 31, while the STTR program is set to end Sept. 30.

If enacted, the SBIR/STTR Reauthorization Act of 2009, S. 1233, would permit small companies that receive the majority of their financing from venture capital to be considered eligible to compete for SBIR grants, overturning eligibility requirements added in 2003 that disqualified firms with venture-capital investments greater than 50%.

Since that 2003 reinterpretation, the applicant pool at the National Institutes of Health has been shrinking, said Jim Greenwood, CEO of the Biotechnology Industry Organization.

"For six years, more than half of all small, private U.S. biotech companies have not been allowed to compete for SBIR grants due to a bureaucratic ruling," Greenwood said, adding that under the new Senate bill, more biotech start-ups will be allowed to compete for the funds.

Reauthorizing the SBIR and STTR programs, Snowe said, would "unleash the groundbreaking innovation potential of our nation's small businesses," noting that the grants are needed now more than ever, given the economic climate.

"By assisting thousands of pioneering small businesses with the development and promotion of scientific breakthroughs, the SBIR and STTR programs keep America ahead of the curve," Snowe said.

The SBIR program was established by Congress in 1982 and the STTR program in 1992 to provide competitive grants to small businesses in the U.S. to encourage exploration of new technologies.

Federal agencies with an annual external R&D budget of more than $100 million must allocate 2.5%of their extramural R&D dollars to the SBIR program. Agencies with an annual external R&D budget of more than $1 billion must allocate an additional 0.3% to the STTR program.

The last comprehensive reauthorization of the SBIR program occurred in 2000. That program, which was reauthorized for eight years, received two temporary extensions, first to March 20 and the most recent to July 31. The STTR was last reauthorized in 2001, also for eight years.

If enacted, the bill would reauthorize the programs for 14 years and would adjust the amount of SBIR and STTR awards to reflect inflation costs.

Similar bills were introduced in the 110th Congress, but stalled.