R&D Tax Breaks' Fate IS Uncertain - C&EN Global Enterprise (ACS

committee chairman, said businesses need certainty to hire, invest, and grow. “This bipartisan work is just what all members of Congress will need t...
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NEWS OF THE W EEK

CHINA CRACKS DOWN ON FAKE DRUGS REGULATION: Police go after counterfeits as new laws target quality

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HE CHINESE GOVERNMENT is coming down

IMAGINECHINA/AP

Raids in July captured large quantities of fake drugs in China.

hard on drug counterfeiters while also issuing new regulations aimed at improving the quality of legitimate pharmaceuticals. In nationwide raids announced last week, 18,000 Chinese police detained more than 1,900 people suspected of making or selling fake drugs, according to the Chinese Ministry of Public Security. Authorities seized $182 million worth of counterfeit medicines. The counterfeits were advertised for treating hypertension, diabetes, cancer, and other conditions, but in fact caused liver, kidney,andcardiovasculardamage. Asia ranks first among geographic areas frequently linked to pharmaceutical crime, according to the Pharmaceutical Security Institute, an industry-backed nonprofit

R&D TAX BREAKS’ FATE IS UNCERTAIN TAX POLICY: Legislation to extend

incentives clears key Senate committee, but hurdles remain

L COURTESY OF MAX BAUCUS

EGISLATION TO EXTEND several dozen expired

Baucus

or soon-to-expire tax breaks, including a credit for research and development activities and incentives for the production of alternative transportation fuels, has cleared the first hurdle—approval by the Senate Finance Committee. In the past, the provisions have been extended with little fanfare. But Congress is unlikely to sign off on this package anytime soon because lawmakers in both parties want to use the tax breaks as bargaining chips in upcoming battles over spending cuts and income tax rates. The Finance Committee endorsed the $205 billion package of so-called tax extenders by a vote of 19-5 on Aug. 2. Sen. Max Baucus (D-Mont.), committee chairman, said businesses need certainty to hire, invest, and grow. “This bipartisan work is just what all members of Congress will need to do with the fiscal cliff looming and tax reform on the horizon,” he remarked after the vote. WWW.CEN-ONLIN E .ORG

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group. In 2011, 954 of 1,986 reported incidents occurred in the region. The high numbers often reflect active law enforcement and inspection efforts, PSI points out. The Chinese ministry acknowledges that counterfeit crime is far from being eradicated and that methods to hide it have become more deceptive (see page 11). The government says it is nevertheless trying to disrupt production and distribution of fake drugs. In the latest raids, 1,100 such sites were destroyed. The ministry is offering rewards of up to $7,800 to whistle-blowers. Meanwhile, effective on Feb. 1, 2013, China’s State Food & Drug Administration (SFDA) will introduce tougher standards for excipients, the nonactive ingredients used to formulate drugs. The new rules follow revelations that Chinese companies manufactured drug capsules using industrial-grade gelatin made from leather scraps, which contain high levels of chromium, according to China’s state-run news agency, Xinhua. These incidents led to arrests and shutdowns in April and May. Excipients production is relatively new in China, having emerged in just the past 30 years, Xinhua reports. Legislation governing the sector wasn’t created until 2001, and SFDA issued its first quality management guidelines only six years ago. As outlined in the new regulations, SFDA will increase its monitoring of drug formulators and excipient manufacturers. New excipients, or those potentially posing safety risks, will have to be registered and approved.—ANN THAYER

Baucus was referring to the feud between Democrats and Republicans in both the House of Representatives and the Senate over how to avoid the sequester, or $109 billion in automatic, across-the-board spending cuts that are scheduled to take effect on Jan. 2, 2013. Baucus said he hopes the full Senate will vote on the tax extenders package soon. But lawmakers are on a monthlong summer recess and won’t return to the nation’s capital until Sept. 10. Meanwhile, Rep. Patrick J. Tiberi (R-Ohio), who is spearheading the House effort to extend the tax breaks, has said that his legislation will not be ready until after the November elections. The R&D tax credit, which expired at the end of 2011, allowed companies that perform technological research in the U.S. to take a 14% tax break on the costs of wages and materials. The draft Senate measure would retroactively renew the research credit through 2013. The Biotechnology Industry Organization “strongly supports the provisions of the package which would extend the valuable R&D tax credit for two years,” says James C. Greenwood, CEO of the trade association. The Senate proposal also includes a production credit for wind energy, as well as tax breaks for a variety of alternative fuels and associated infrastructure, including biodiesel, cellulosic biofuels, vehicles fueled by compressed or liquefied natural gas, and electric vehicles.—GLENN HESS

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