The R&D Tax Credit Aspects of Asthma



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Asthma

        According to the World Health Organization, 235 million people currently suffer from asthma worldwide.  This chronic condition is often underdiagnosed and undertreated, thus representing a significant public health burden. Innovative approaches, however, promise to change the way we prevent, monitor, and treat asthma. The present article will discuss recent trends in asthma research, including how the Internet of Things is paving the way for more effective treatments. It will also present the R&D tax credit opportunity available for those engaged in asthma-related innovation.


The Research & Development Tax Credit

        Enacted in 1981, the Federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of uncertainty
  • Process of experimentation

        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent.  

        On December 18, 2015 President Obama signed the bill making the R&D Tax Credit permanent.  Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax and startup businesses can utilize the credit against payroll taxes.
   

Understanding Asthma

        Asthma is a chronic condition that affects the airways in the lungs. Asthma attacks, which can vary from mild to life threatening, are characterized by the inflammation of the airways and consequent difficulties to breathe. In addition to shortness of breath, these attacks often involve coughing, wheezing, and tightness or pain in the chest.

        There is no consensus around what causes asthma; it may be due to genetic or environmental factors, or a combination of both. Well-known triggers of asthma attacks include allergens (such as pollen, mold, animal dander, and dust mites), physical exertion, drugs and food additives, occupational hazards, pollution, and airway infections. There is also no cure for asthma; those who suffer from this condition must seek continuous medical care and avoid triggers. Asthma medications can be classified into long-term control and quick-relief drugs. While the first group aims to control symptoms through continuous intake, the second is designed to treat asthma attacks.

        A better understanding of the patterns of asthma prevalence is key to the development of more effective treatments. A particularly important area of research is racial disparities. According to a 2015 study by researchers from Harvard University, black people have higher asthma rates relative to whites, and Hispanics had lower rates than whites. Even though the authors were unable to identify the drivers of such disparities, they pointed out that differences in access to quality healthcare and in exposure to pollutants and environmental stressors may play a role. Still, disparities persisted even after accounting for income and education, which calls for further investigation into their underling determinants.  


Prevalence and Impacts in the U.S.

        According to the Asthma and Allergy Foundation of America, about 25.9 million Americans have asthma, a condition that affects 8 percent of adults and 10 percent of children in the country. Asthma results in almost 2 million emergency room visits, more than 14 million doctor visits, 439,000 hospitalizations, and 3,600 deaths annually. As the most common chronic illness among children, asthma accounts for 10.5 million missed school days each year.

        The annual cost of asthma is estimated at $56 billion, $50.1 billion of which in direct medical costs, such as hospital care, physicians’ services and medications, and $5.9 billion in indirect costs, including lost workdays and decreased productivity.


Asthma and the Internet of Medical Things

        The Internet of Things is revolutionizing healthcare.  Unprecedented connectivity has enabled the emergence of more effective, personalized treatments and has empowered patients to monitor and improve their conditions.

        In the new era of health and wellness wearables, smart inhalators promise to have an increasingly prominent position.  In addition to monitoring patients’ conditions and identifying risk factors for attacks, these devices show particular promise in helping improve therapy adherence, which is considered a major challenge due to non-adherence rates that vary from 30 to 70 percent for asthmatic patients, according to the World Health Organization.  
       
        The market for next-generation inhalers is rapidly growing and has become a key focus area for pharmaceutical companies. Recently acquired by Teva Pharmaceuticals, Cambridge, Massachusetts-based Gecko Health Innovations is the creator of CareTRx, a platform for managing chronic respiratory diseases. The innovative product brings together a sensor device that can be connected to most inhalers, a data analytics platform, and a user-friendly mobile application.

        When a dose is delivered, the attached sensors and onboard memory attached to the inhaler register the information, which is automatically transferred to the users’ mobile device. In addition to alerting when it’s time for a dose, the solution also features a diary for tracking potential triggers, peak flow, and symptoms, a prescription adherence tracker, a reward system for “good” behaviors, and the possibility of sharing data with healthcare professionals. Gecko plans to expand its analytics to include a wider variety of data, including local weather and air quality.  

        GlaxoSmithKline (GSK) recently announced a partnership with Madison, Wisconsin-based Propeller Health, which will create a custom sensor for the Ellipta inhalers.  Similar to other devices previously designed by Propeller, the sensor will record data on the frequency and location of inhaler use and wirelessly transfer this information to GSK researchers. The idea is to uncover patient adherence patterns during clinical trials and use this knowledge as basis for the development of new products and treatment protocols.    

        In July 2015, Propeller received FDA clearance to market its sensor devices and digital health platform as improving – not only tracking – medication adherence. The company, which has worked in partnership with German Boehringer Ingelheim, uses various approaches to promote adherence, including in-app notifications, SMS, and audiovisual reminders on users’ devices.  

        Academic and research institutions are also exploring the potential connections between mobile technology and asthma treatment. Researchers from the University of California, Los Angeles and the University of Southern California have recently been awarded $6 million by the National Institute of Biomedical Imaging and Bioengineering to develop a mobile application for predicting asthma attacks in children. The grant is part of an initiative called Pediatric Research using Integrated Sensor Monitoring Systems, which aims to use big data and mobile technology to help understand how environmental conditions can affect children’s health.

        The innovative UCLA-USC application will use sensors that will be worn by the children and placed in various locations, such as their homes and schools. Through cloud-based technology, the information collected will be integrated with the patient’s electronic medical record, real-time weather and air quality data as well as a calendar of previous exacerbations. By analyzing this wealth of information, the app will be able to warn users when conditions are likely to cause another attack. In addition to the big data-related challenges, researchers are also working on creating a user-friendly interface for young children.


AIR Louisville: Big Data and Public Health

        Smart technology promises to become a strategic tool in public health programs. An interesting example comes from Louisville, Kentucky, which has one of the highest asthma rates in the country. A partnership between the city’s public health department, Propeller Health, and the Institute for Healthy Air, Water and Soil has lead to the creation of AIR Louisville, an ambitious and innovative program that aims to equip citizens with sensors for their asthma inhalers. The idea is to track when, where, and how often the inhalers are used and subsequently use this information to help patients manage their symptoms and allow policy makers to make well-informed decisions.  The program started in 2012 with 300 participants and is now expanding to involve two thousand asthmatic residents.  


Genetic and Microbiome Research

        Microbiome research, or the study of the immense community of microbes residing in and on the human body, can be a promising alternative for the treatment and prevention of asthma.  

        Research has unveiled links between babies born via C-section and the prevalence of the condition. This has been explained by the non-exposure to certain microbes that live in the mother’s birth canal. Aiming to change this scenario, researchers at New York University and the Icahn School of Medicine are currently assessing the potential benefits of performing a microbial transfer as a means to prevent asthma, allergies, and autoimmune diseases. The ongoing study already proved that the C-section babies that were exposed to their mothers’ bacteria developed microbial neighborhoods that were more similar to vaginally born infants than to other ones born surgically. The outstanding question is whether this change in microbiome will translate into better health in the years to come.  
       
        The role of genetics in the asthmatic population is also a promising area of research. An ongoing study at the University of Arizona has focused on the protein surfactant, which is abundant in the lungs and helps clearing out infections. Researchers have unveiled a connection between a mutation in this protein and a greater susceptibility to asthma exacerbations.  


Emerging Injectable Medication

        Asthma treatments have traditionally taken the form of inhaled medications. Aiming to offer an alternative form of drug delivery – and tackle a potential $7 billion in sales per year, major pharmaceutical companies have invested in injectable asthma treatments.

        In November 2015, GlaxoSmithKline received FDA approval for Nucala, an innovative biological drug to be delivered subcutaneously as an add-on maintenance treatment for severe asthma patients. The first-of-its-kind medication targets the cell signaling protein interleukin-5 (IL-5), which regulates inflammatory cells known as eosinophils.

        Other injectable therapeutics for sever asthma include Norvartis and Genentech’s antibody treatment Xolair, which is already on the market, and AstraZeneca's Phase III benralizumab, which has the same anti-IL-5 mechanism of action as Nucala. Teva Pharmaceuticals has also expressed its intent to join the emerging injectable asthma medication market.


A Preventive Approach

        A recent study by Belgium researchers may have shed light on the possibility of developing a vaccine against asthma. For a while now, there seemed to be a connection between growing up on farms and being protected against asthma and allergies. This innovative research unveiled a casual relationship between the exposure to farm dust and the prevention of such conditions.

        Upon contact with farm dust the body synthesizes a protein called A20, which acts as a protection against asthmatic or allergic reactions, making “the mucous membrane inside the respiratory tracts react less severely to allergens, such as house dust mite.” The study examined 2,000 people who grew up on farms, most of which did not suffer from allergies or asthma. The ones who did suffer were found to have a genetic variance of the A20 that caused it to malfunction.

        Though undoubtedly an important step towards the development of an asthma vaccine, there are major outstanding challenges, including the identification and isolation of the substance found in farm dust that is responsible for the protection.

        Researchers from University of Alabama at Birmingham are also working on a preventive approach to asthma. Using house dust mite (HDM) allergen, they have recently discovered new information on how allergic responses develop. According to their findings, the initial, or sensitization, exposure to HDM does not cause the classical allergic response of asthma but leads to the formation of memory immune cells that are assisted by B cells, known as T follicular helpers (Tfh). When subject to a second dose of HDM, these cells differentiate into a new type of cell that then attacks the allergens and unleashes the destructive asthma responses that makes breathing difficult.

        In the words of Frances Lund, Ph.D., professor and chair of the microbiology department "This finding really changes the way we might think about treating allergic diseases and also has important implications when thinking about how young children are first exposed and sensitized to allergens." Researchers believe that targeting Tfh cells could be a promising new way to prevent asthma.  


Conclusion

        There are many unanswered questions as to what causes asthma and the best ways to treat and prevent it. Innovative efforts, however, promise to improve the lives of millions of people who suffer from this chronic condition. From smart inhalers to injectable medication and microbiome transplants, this exciting field of research is rapidly evolving. R&D Tax Credits are available to help support and stimulate companies engaged in asthma-related innovation.

Article Citation List

   


Authors

Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Andrea Albanese is a Project Manager with R&D Tax Savers.

Andressa Bonafé is a Tax Analyst with R&D Tax Savers.


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