The IGNITE American Innovation Act has been introduced to the US House of Representatives and, if passed, will build on the CARES Act
The US medtech industry has applauded the new IGNITE American Innovation Act, which could provide economic relief to small companies impacted by the Covid-19 crisis.
A coalition of ‘start-up advocates’ including eight major organisations from across the sector has voiced its support for the bill, with one industry executive describing it as a “vital lifeline” for innovators.
The IGNITE American Innovation Act was introduced to the US House of Representatives on 5 August by Reps Dean Phillips and Jackie Walorski.
If it is entered into legislation, the bill will allow companies with fewer than 1,500 employees to bring forward and monetise certain tax assets – up to a value of $25m – and provide firms with bonuses for tax assets generated through coronavirus-related technologies.
In a statement, the coalition said: “On behalf of start-ups, their 2.27 million workers, and investors, we are thrilled to endorse the IGNITE American Innovation Act – the most significant pro-start-up proposal under consideration during economic recovery package negotiations.
“This bill will create jobs and sustain critical economic activity immediately, activity that will pay long-term dividends to American workers and the US economy through greater innovation and market competition, and the creation of more cutting-edge US companies.
“We commend the strong leadership of Reps Phillips and Walorski during this crisis, and look forward to working to include the IGNITE American Innovation Act in an upcoming economic recovery package.”
The IGNITE American Innovation Act
In March, the CARES (Coronavirus Aid, Relief and Economic Security) Act – a $2.2tn economic stimulus package designed to offset the economic fallout resulting from the Covid-19 crisis – was signed into US law by President Donald Trump.
However, many small and medium-sized innovators and manufacturers were unable to take advantage of the tax provisions set out under this legislation, because they don’t generate any taxable income.
The IGNITE bill will therefore attempt to build on the CARES Act, allowing these firms to claim tax relief by monetising millions of dollars worth of accumulated net operating losses (NOLs) and R&D credits.
The bill will also double the financial value of NOLs and R&D credits generated via research or production of products used in preventing, diagnosing, or treating Covid-19.
Congresswoman Jackie Walorski – who represents the second district of Indiana and introduced the IGNITE bill alongside Rep Dean Phillips – said: “America’s recovery from this unprecedented health and economic crisis will be driven by our innovative and entrepreneurial spirit.
“High-tech innovators and medical device manufacturers – including many in northern Indiana – will play a vital role in improving healthcare, discovering treatments and cures, rebuilding our economy, and creating good jobs.
“The IGNITE American Innovation Act will give startups greater opportunity to continue growing, innovating, and developing life-saving technologies at a time when we need them more than ever.”
Support for the bill
One of the eight organisations that recently voiced its support for the bill – and signed a letter of support addressed to Reps Phillips and Walorski – was the Advanced Medical Technology Association (AdvaMed).
Ashley Wittorf, executive director of AdvaMed Accel – which is dedicated specifically to accelerating the growth of smaller medical device manufacturers – said: “American medtech innovation is driven by small companies and start-ups on the cutting edge of improving patient care.
“In the best of times, these heavily R&D-focused firms struggle to find the financing and resources they need to navigate tough regulatory and reimbursement pathways in order to bring a new device or diagnostic to market, and that challenge has been magnified by the pandemic.
“The legislation introduced by Reps Dean Phillips and Jackie Walorski will serve as a vital lifeline to these small, entrepreneurial companies, allowing them to weather the current Covid-related economic downturn, and continue developing the next-generation treatments and cures patients are waiting for.”
John Dearie, president of the Center for American Entrepreneurship (CAE) – another organisation that signed the letter – said: “Research has consistently demonstrated that start-ups are disproportionately responsible for the innovations that drive economic growth and job creation.
“And, yet, the Covid-19 emergency has imperiled an entire generation of young businesses, potentially crippling the post-crisis economic recovery.
“By helping to get badly needed capital to struggling start-ups, the IGNITE American Innovation Act makes a vital investment in America’s most innovative and promising young companies and, in turn, the US economy’s capacity to sustain and recover from the Covid-19 emergency.”
The other organisations advocating the IGNITE bill are the Medical Device Manufacturers Association (MDMA), the National Venture Capital Association (NVCA), Biotechnology Innovation Organization (BIO), Angel Capital Association (ACA), Technology Councils of North America (TECNA), and TechNet.