According to the American Diabetes Association, 25.8 million people in the United States - more than 8% of the population - have diabetes. More than 1.6 million new cases are diagnosed in the country every year and, if current trends persist, 1 in every 3 Americans is expected to have diabetes by 2050. The disease costs about $174 billion annually, and is currently the seventh leading cause of death in the U.S. and the first cause of new cases of blindness among adults, nontraumatic lower limb amputations, and kidney amputations.
For years, many leading companies have
engaged in research and development
efforts aimed at achieving an eventual cure. Federal R&D
Tax Credits are
available to support credit eligible diabetes innovation
activities.
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:
Eligible costs include employee wages, cost
of supplies, cost of testing,
contract research expenses, and costs associated with
developing a patent. On January 2, 2013, President Obama
signed the bill extending the R&D
Tax Credit for 2012 and 2013 tax years.
Diabetes mellitus is a general denomination for a group of metabolic diseases characterized by high blood glucose levels caused by deficiencies in the capacity to produce and/or respond to insulin. This hormone, produced by the pancreas, is fundamental to the conversion of sugar, starches and other food into energy. There are three main types of diabetes:
Causes of diabetes are not clearly defined but the disease has been linked to genetic risk factors, environmental aspects, and lifestyle factors, particularly obesity. This is especially worrying in a country where average human body weight has increase disproportionately in the last decades .
The accumulation of glucose in the blood,
caused by the absence or inaction
of insulin, can cause various complications. The shortage of
or resistance to
insulin undermines the provision of energy to the body's
cells. This can
lead different diabetic emergencies, such as diabetic
ketoacidosis and
hyperosmolar nonketotic state. Over time, high blood glucose
levels can lead to
cardiovascular diseases, strokes, peripheral vascular disease,
kidney diseases,
blindness, and nervous system damages that can eventually lead
to
amputations.
Diabetes treatments currently available are far perfection, particularly with regards to efficacy and safety. Various pharmaceutical companies are currently engaged in diabetes R&D, a scientific race to an enormous market. According to Fierce Biotech, there are currently more than 100 new therapies in mid- to late-stage clinical trials. The following table presents a summary of the top diabetes pipelines of 2012:
Other examples of innovative approaches to diabetes research include Lilly's focus on specific markets, such as African American and Asian patients. The company has recently opened a Research and Development Center focused on the Chinese population . Similarly, the Danish company Novo Nordisk has adopted a unique concept that combines basic research and early proof-of-concept trials. This approach is at the basis of its recently inaugurated Type 1 Diabetes R&D Center, in Seattle, WA . GlaxoSmithKline has also rearranged its R&D activities, organizing it by therapeutic areas, rather than by functions. The company's metabolic pathways therapy area unit is responsible for the complete process of diabetes drugs development from the early stages of drug mechanisms to the marketed product. This approach is said to close the gap between scientists and end-users, increasing patient visualization.
In a recent article entitled "The Race in Diabetes R&D" , Murray Stewart, head of GSK's metabolic pathways therapy area unit, highlights the most promising efforts in diabetes research. In his words, "sophisticated approaches are on the horizon that may come close to the Holy Grail - curing the disease completely". These include beta-cell transplant and/or rejuvenation as well as the stem cell approach.
However, pharmaceutical groups face
significant challenges in the
advancement of diabetes treatments. In addition to the high
costs, growing
demands from regulatory bodies represent further obstacles.
This is
particularly due to controversial drugs, such as GSK's Avandia
, whose adverse
effects have intensified the discussions on safety risks of
diabetes therapies.
The Food and Drug Administration has recently delayed the
introduction of Novo
Nordisk's potential blockbuster diabetes drugs, Tresiba,
which, according
to the agency, must go through additional clinical testing on
its
cardiovascular effects. In an effort to combine resources,
AstraZeneca and
Bristol-Myers Squibb have established a marketing partnership
denominated "Diabetes Inc".
In the words of Jan Lundberg, Executive Vice President, Science and Technology and President, Lilly Research Laboratories, "conquering a devastating disease like diabetes requires innovation, collaboration and investment". In a scenario of high investments and growing regulation standards, federal R&D tax credits are available to support ever more pressing diabetes innovation activities.
Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.
Andressa Bonafé is a Tax Analyst with R&D Tax Savers.
Charles G Goulding is a practicing attorney with experience in R&D tax credit projects for a host of industries.
