The R&D Tax Credit Aspects of Foodborne Illnesses

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        Every year, one in six Americans - or 48 million people - become ill from foodborne diseases in the U.S. According to a May 2015 report by the U.S. Department of Agriculture (USDA), the economic burden of major foodborne illnesses acquired in the country amount to over $15.5 billion annually.

        The undeniable public health and economic significance of such diseases call for immediate action. This article will discuss ongoing efforts to create more effective ways to prevent foodborne illnesses. It will further present the R&D tax credit opportunity available for companies engaged in this area of research.

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 19, 2014 President Obama signed the bill extending the R&D Tax Credit for the 2014 tax year.

The Burden of Foodborne Illnesses

        According to the National Institute of Allergy and Infectious Diseases, there are over 250 known foodborne diseases. They can be caused by pathogens, such as bacteria, viruses, or parasites; allergens; or natural and manufactured chemicals present in food.

        Data from the Centers for Disease Control and Prevention (CDC) show that, every year, 48 million Americans get sick, 128,000 are hospitalized, and 3,000 die of foodborne diseases.  Cases vary in severity and can occasionally result in long-lasting health conditions including chronic kidney disease, recurring intestinal inflammation, reactive arthritis, blindness, and mental disability.  One of the most pressing challenges surrounding foodborne diseases is the inability to identify their causes. According to the CDC, the source pathogen is unknown in 80 percent of all foodborne illnesses in the U.S. The remaining 20 percent is linked to 31 identifiable pathogens, among which, 15 are responsible for 95 percent of all cases. 

The social and economic impact of these 15 pathogens is major and cannot be overlooked. The USDA estimates that the incidence of foodborne illnesses caused by such pathogens imposes an economic burden of over $15.5 billion on the U.S. every year. This measure reflects deaths and the medical costs and productivity loss caused by nonfatal cases.

    The USDA considers this economic burden as an estimation of the society’s willingness to pay to reduce the incidence of foodborne illnesses. In fact, both government and private sectors have mobilized significant resources in trying to overcome this public health threat.

Food safety research is often organized in three overarching domains, namely:
  1. Pathogens
  2. Food Commodity
  3. Farm-to-table Continuum

The following table gives a few examples of focus areas within each domain.

Food Safety Research

Pathogens Food Commodity Farm-to-Table Continuum
Salmonella spp. Poultry On-Farm Food Production
Campylobacter spp. Dairy Product Food Processing
Clostridium perfringens Egg Food Transport
Escherichia coli O157:H7 Beef Retail and Food Service
Listeria monocytogenes Pork Consumer
Norovirus Seafood

Toxoplasma gondii Produce, Grain, and Bean & Beverages

Government Food Safety Initiatives

        President Obama’s 2016 budget proposal includes the creation of a governmental agency dedicated to making Americans’ food safer. Based in the Department of Human Services, the new institution would take over the inspection duties that are currently scattered among more than a dozen federal agencies, including the USDA and the Food and Drug Administration (FDA).

        The budget proposal highlights that "fractured oversight and disparate regulatory approaches" cause confusion. Consolidation "is an essential step to reforming the federal food safety system overall.”

        The proposed change would likely increase oversight and enable more stringent regulation.  For instance, new standards proposed by the USDA to reduce the rates of Salmonella and Campylobacter in poultry, which are currently voluntary, could become enforceable in the near future. The standards establish new, acceptable levels for Salmonella and Campylobacter in chicken breasts, legs , and wings, and for Campylobacter in ground chicken and turkey. It is expected to prevent about 50,000 illnesses each year.

        The recently proposed consolidation could be understood as a development of the Food Safety and Modernization Act (FSMA), signed into law in January 2011. The Act advocates a preventive approach to foodborne illnesses and envisions an integrated food safety system that brings together federal agencies, state health and agriculture departments, along with industry and university partners, under the coordination of the FDA.

        By fostering synergies among multiple stakeholders, the FSMA aims to implement a science-based system that addresses food safety hazards from farm to fork. To this end, the U.S. government conducts and sponsors food safety research and innovation aimed at creating effective tools for preventing foodborne diseases.

        Responsible for ensuring that the nation's commercial supply of meat, poultry, and egg products are safe, wholesome, and correctly labeled and packaged, the USDA is an important supporter of food safety research.

        In 2014 alone, it invested over $70 million in food safety research, education, and extension programs. Recent research efforts funded or conducted by the agency have patented new technology that protects pasteurized liquid eggs and examine the safety of beef trim imports. USDA efforts have also led to the publication of the first draft genomes of six dangerous non-O157 strains of E. coli.

        Another example of food safety innovation is the National Antimicrobial Resistance Monitoring System (NARMS), a national public health surveillance system that tracks antibiotic resistance in foodborne bacteria. Bringing together the FDA, CDC, and USDA, it conducts research to better understand the emergence, persistence, and spread of antimicrobial resistance. NARMS also focuses on epidemiological and microbiological research as well as the examination of foodborne bacteria for genetic relatedness, using pulsed-field gel electrophoresis (PFGE).

University Efforts

        On May 13, 2015, the FDA announced the five finalists of it’s first-ever Food Safety Challenge.  Four of which are research efforts led by academic institutions, which is an important indicator of how universities have contributed to the prevention of foodborne illnesses.

I.    University of California, Davis: UC Davis was recently ranked number 1 in the world for teaching and research in agriculture by QS World University Rankings.  The University has been very active in food safety research through a range of national and international initiatives.

        UC Davis is home to the Western Center for Food Safety (WCFS), a joint effort with the FDA created to research the interface between production agriculture and food protection, identify real-world solutions to food safety challenges in these systems, and communicate new knowledge through outreach and education.

        Located near over 50 percent of the U.S. fresh fruit, vegetable, and tree nut production, the WCFS is uniquely equipped to conduct field trials and generate knowledge to address high-priority public health issues regarding FDA-regulated produce.  Ongoing studies focus on developing science based food safety metrics for leafy greens and tomatoes; evaluating the risk of salmonellosis associated with almond and pistachio consumption; monitoring foodborne pathogen concentration and distribution in irrigation water systems; identifying pre-harvest risk factors for foodborne pathogen transfer to fresh produce; among many others.  
        On May 22, UC Davis signed an agreement with the city of Zhuhai, China, to establish joint food safety programs in what will be the World Food Center-China. The Center will organize research and establish goals regarding food production in the country.

        China has recently faced a surge in food safety scandals, which are leading to a reform of national legislation.  According to Roger Beachy, executive director of the UC Davis World Food Center, “China has placed a very high priority on improving the safety of its food and restoring confidence in consumers here and around the world. We will measure success by the reduced incidence of unsafe foods in China in coming years.”

II.     Auburn University: Created in 1999 and designated as a University Peak of Excellence, the Auburn University Detection and Food Safety Center aims to develop the “science and engineering required to rapidly identify, pinpoint, and characterize problems that arise in the food supply chain through the integration of sensor and information systems technology.”

        Gathering researchers from five different areas (agriculture, engineering, human sciences, mathematics, and veterinary medicine), the center combines advances in the identification of foodborne illnesses and contaminants with the latest in biosensor technology.

        With the ultimate objective of creating a system that monitors food products from production to consumption, ongoing efforts are primarily focused on bimolecular recognition and detection devices. Examples include RNA-based biosensors for pathogen detection, new biodetection methods using amplified photo electrochemical signaling, air sampling for E. coli detection, chemical sensing strategies based on molecularly imprinted polymers, among others.

        Auburn University is among the FDA’s Food Safety Challenge finalists with a cutting-edge project that combines magnetoelastic biosensors and a surface-scanning detector used directly on food surfaces.

        The innovative technology offers an inexpensive, accurate, and easy-to-use means to detect Salmonella in fresh fruits and vegetables. It uses biosensors that are smaller than a dust particle and cost less than 1/1000 of a cent per unit. More than 50 individual biosensors may be placed on a single globe fruit and simultaneously interrogated to detect contamination.

        Data from these sensors can be used identify the sources of Salmonella contamination and can then be incorporated into a comprehensive growth, harvest, and transportation management plan to ensure safer food products.

III.    Purdue University: Established in 2000, the Center for Food Safety Engineering (CFSE) is a partnership between Purdue University and the USDA Agricultural Research Service - Eastern Regional Research Center.

        With the objective of advancing the detection and prevention of chemical and microbial contamination, CFSE’s researchers have worked on the development of innovative systems, which include:

  • C3D: Effective food sampling protocols and filtration techniques to maximize microbial cell separation and concentration in an automated instrument.

  • Biochip: Biochip systems, using immunobiology and electrochemistry, for detecting viable cells of Salmonella enterica serovars, Shiga toxin-producing Escherichia coli (STEC), and Listeria monocytogenes in food.

  • BARDOT: The Bacterial Rapid Detection using Optical-scattering Technology (BARDOT) system for microcolony detection and identification of bacteria, including pathogenic L. monocytogenes, select Salmonella serovars, and STEC.

  • Phage: A one-step method using bacteriophages carrying reporter genes for detecting E. coli O157:H7, STEC, and other foodborne pathogenic bacteria directly in the enrichment bag.

  • Raman Sensor: A Raman biosensing platform for detecting single pathogenic cells.

  • And many others, such as next-generation metagenomic sequencing methods, immunocytochemistry techniques, and immunobiosensors.

        Purdue University is also one of FDA’s Food Safety Challenge finalists. The selected project involves the development of a device that speeds the concentration step in food-pathogen detection. Using hollow, thread-like fibers that filter out the cells, it allows for the screening of food and water samples within a single work shift at food processing plants (six hours or less).

        CFSE is also responsible for an interesting project aimed at the identification of Listeria monocytogenes in retail deli environments. According to the FDA and the USDA, the vast majority of human listeriosis cases are due to the consumption of ready-to-eat (RTE) deli meats, 83 percent of which result from consumption of deli meats that are cross-contaminated at retail.

IV.    University of Arizona & Arizona State University: Technologies from Arizona State University and University of Arizona have recently been licensed to Tucson-based startup Anivax to create a food safety vaccine to be used in chickens.

        The vaccine targets Campylobacter, which is among the world’s most common bacterial causes of acute gastroenteritis, surpassing Salmonella. According to the CDC, campylobacteriosis is estimated to affect over 1.3 million people every year in the U.S.

        The bacteria lives in chickens’ intestines and can contaminate meat during slaughter. If the chicken is not properly cooked, it can infect humans through ingestion. When administered to poultry, the vaccine can significantly reduce the Campylobacter load, leading to a lower incidence of human disease and associated conditions.  

        It does so by triggering the creation of proteins that don’t allow Campylobacter to attach to the chicken’s intestinal wall. Anivax expects to obtain the necessary approvals for commercialization from the USDA in two to three years.  

Technological Innovation and the Prevention of Foodborne Illnesses

        Recent highly publicized food safety incidents shed light on the severe impacts of breaches in food quality and safety standards. The recall of food products due to contamination can irreversibly undermine a brand’s viability, resulting in significant reductions in market share and enterprise value. As regulators adopt a preventive approach to foodborne illnesses, the food and beverage industry must make food safety a top priority. Technological innovation can be a strategic ally in this quest.

I.     Food Monitoring and Traceability: According to Hazard Analysis Critical Control Point (HACCP) reports published by the U.S. Department of Health, one of the main causes of foodborne illnesses is inadequate storage conditions. This is partially explained by the fact that manually checking temperature and humidity of storage areas is a time-consuming and error-prone task.

        In this context, technological advancements can go a long way in helping prevent foodborne diseases. Created by Swedish company Elektron Technology, Checkit is a smart, paperless system for monitoring food safety and hygiene processes. It uses wireless fixed sensors to provide continuous, automated monitoring of cold storage and hot holding units. Wireless handheld sensors can also be used to check the temperature of goods, perform line checks, or log cleaning tasks.

        User-authenticated, time-stamped data is downloaded to the Checkit hub where food safety compliance reports and full audit trails are automatically generated. The system allows for remote access to the collected information and sends alerts via SMS or email when something goes wrong.  

        Enhanced visibility throughout the production process and logistics network can also help prevent foodborne illnesses outbreaks. According to TechNavio, the global food traceability market will grow at a compound annual growth rate of 9.88 percent from 2014-2019.  

        A pioneer in this market, Longwood, Florida-based N2N Global offers groundbreaking monitoring capabilities designed to ensure the integrity of the entire supply chain. The company’s Food Safety Management (FSM) is a workflow management application that enables electronic data capture, storage, and analytics.

        FSM can be installed on most mobile devices and therefore used in virtually all types of environments. Throughout the production and logistics processes, supply chain data can be updated with information about date, time, location, temperature, and food safety compliance.
        In addition to supporting a company’s quality assurance, food safety management, and regulatory compliance processes, FSM helps expedite responses to food safety threats. It offers automatic notices set-up by risk level designed to make sure that the right people get notified depending on the risk and that decisions are made at the right level in the organization.

        Also in an effort to prevent outbreaks of foodborne illnesses, researchers at the  Oakland, California-based startup, DNATrek and the Lawrence Livermore National Laboratory (LLNL) have developed a cost-effective and highly efficient method to accurately trace contaminated food back to its source. DNATrax, a 2013 R&D 100 Award winning technology, works as a microscopic barcode that is sprayed on food at the farm or processing company.

        The odorless, tasteless, and invisible taggant is comprised of sugar and non-living and non-viable DNA. It has been approved by the FDA as a food additive, safe for consumption. If a food is contaminated, DNATrax can be extracted and analyzed to reveal its exact source in an hour. A tainted apple, for instance, could be “traced back to the orchards by DNATrax to determine when it was picked, who picked it and potentially which tree it came from.”

        The technology could contribute to reducing the impact of contaminated food. In addition to preventing these foods from sickening more people, it could also save producers money by avoiding massive recalls due to poor traceability.  

II.     Pathogen Identification: Traditional, cultivation-based methods for testing foodborne pathogens are complicated and time-consuming. Faced with the outbreak of foodborne illnesses, authorities must wait up to five days to identify the culprit.

        In this context, R&D efforts are underway to create pathogen identification alternatives that are quicker, simpler, and adaptable to different applications.

        Japanese multinational conglomerate corporation Toshiba has partnered with Kawasaki City Institute for Public Health to develop a groundbreaking DNA detection solution capable of simultaneously testing for fourteen major foodborne pathogens in less than 90 minutes.

        The so-called “DNA chip card” uses electrochemical DNA chips and is capable of detecting Salmonella, Campylobacter, Shigella, Bacillus cereus, Listeria, Enterohemorrhagic E. coli, among others. A single operator injects nucleic acid from a stool sample into a slide that is identified with a barcode. It is then tested for 22 genes associated with the pathogens.

        The technology requires considerably less work force and expertise than traditional methods and is, therefore, much less prone to human errors.

        After detecting the presence of a pathogen, the next challenge is identifying its exact source. The inability to pinpoint the causes of foodborne illnesses outbreaks has led to massive, costly recalls. Fortunately, however, emerging technologies can help revolutionize the way pathogens are traced.

        In the recent outbreak of life-threatening Listeria linked to Blue Bell ice cream products, for instance, the CDC relied on whole genome sequencing technology, an innovative means for tracking pathogens.

        By providing the complete DNA make-up of an organism, the technology enables the differentiation of virtually all strains of foodborne pathogens with unprecedented levels of precision. Since the genomic information of pathogens varies according to the geographic area, sequencing can be a powerful tool in determining the root cause of a contamination, especially for multi-ingredient products.

        Sequencing has long been used in medical research but it was just recently incorporated into food safety initiatives. By enabling the comparison of contaminated food samples with the strains of pathogens contracted by patients, DNA sequencing allows for a rapid and accurate identification of the source of the outbreak. When a database of past foodborne illness samples is available, the method can even help investigate cold cases.  

        In the case of Blue Bell, whole genome sequencing revealed that the outbreak was not a recent event and that ice creams were actually making people sick for over five years.

        Aiming to advance the prevention of foodborne diseases, the FDA has established the Whole Genome Sequencing Program. The initiative involves the creation of the GenomeTraker, an open-access genomic reference database of pathogens collected from foodborne outbreaks. The effort aims “to find the contamination sources of current and future outbreaks; to better understand the environmental conditions associated with the contamination of agricultural products; and to help develop new rapid methods and culture independent tests.”


Foodborne illnesses are both a public health and economic concern. Throughout the country, government agencies, universities, and the food industry are engaged in developing the technological tools necessary to prevent such diseases. Food and beverage companies, which are constantly threatened by the devastating consequences of product recalls, should take advantage of federal tax credits to scale up their food safety R&D efforts.

Article Citation List



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

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

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

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