An idea becomes a prototype, then a treatment, then a lifesaver. That’s how R&D is supposed to work, but as Tolmar, Inc., can tell you, tax policy is a crucial element as well.
Tolmar spent years developing a therapy to improve the treatment of advanced prostate cancer. The resulting long-acting injectable, called ELIGARD®, works by stopping testosterone production to slow the growth of cancer cells. It’s a remarkable technology, now used by patients nationwide and around the world who are fighting advanced prostate cancer.
This innovation was facilitated by a U.S. tax policy that supported R&D investments by pharmaceutical companies. However, a recent change means that Tolmar and other pharmaceutical R&D units will find it more difficult to produce innovations that make human lives better, safer, healthier and longer.
The problem: Until about a year ago, businesses were able to deduct 100% of their R&D expenses in the year in which they incurred the expenses. Starting in 2022, however, a change in tax policy requires businesses to spread their R&D deductions out over a period of five years, making it more expensive to invest in innovation.
The cost for companies: “We have a finite amount of capital to put into the development of new products. The changes in tax policy will lead to difficult decisions,” said Tolmar Chief Financial Officer Jeff Lederman.
- “We typically put the vast majority of our cash back into the company—whether that means investing in R&D, capital purchases or our workforce—and if we have less funding, we have to cut back in some or all of those areas. So, this policy change could have a significant impact on our organization.”
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At the NAM, we’re pushing Congress to reverse this change and allow manufacturers to keep investing in innovation, jobs and workers. Learn more and take action at www.nam.org/protect-innovation.