Moving your discovery from the lab to first-in-human (FIH) clinical verification is a necessary step toward FDA approval. Many costs associated with preparing the drug for clinical trials and subsequent human testing are considered qualified research expenses (QREs). The costs of Phase I-IV trials, performed in-house or by third-party contractors, can typically be claimed for the R&D tax credit. As long as your company funds the research, retains the IP rights to the results, and the clinical trials are performed in the U.S., these costs are considered QREs and you can claim the R&D Tax Credit.
Employee wages, raw materials & supplies, and third-party contractor costs associated with R&D activities are considered QREs. Companies can receive refunds of up to 22% of total QREs through federal and state tax credits, depending on the state in which your business operates.
Examples of qualifying activities:
- Designing and implementing novel software solutions to facilitate clinical trials
- Formulating and manufacturing a new compound/drug/biologic
- Hiring a clinical research organization (CRO) to recruit, screen, and enroll clinical trial participants
- Analyzing trial results, e.g. pharmacokinetics, pharmacodynamics, bioavailability, etc.
- Conducting Phase IV studies to determine the long-term effects of a drug
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- Clinical Pharmacologists
- Clinical Trial Coordinators
- Data Managers
- Principal Investigators
- Research Coordinators
- Research Nurses