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Qualifying Therapeutic Discovery Project Credit and Grant Provides a Significant New Opportunity for Qualifying Companies


The new “Qualifying Therapeutic Discovery Project” (QTDP) credit and grant, which was enacted into law on March 23, 2010 through the Patient Protection and Affordable Care Act of 2010 (the “Act”), provides a significant new opportunity for qualifying companies.

The Act creates a new 50% investment tax credit and cash grant program for certain drug development or other medical advances by taxpayers in 2009 and 2010 that do not employ more than 250 employees. 

  • Benefits: Cash grant or tax credit for 50% of the costs of the qualifying project.
  • Total of $1B is allotted for the program over the 2009 and 2010 time period.
  • To receive a grant, taxpayers must apply to the Treasury to certify projects. The Treasury, with the assistance of the Secretary of Health and Human Services, determines which projects will qualify. The process is competitive.

QTDP is defined as:
  1. Project designed to treat or prevent diseases or conditions by conducting pre-clinical activities, clinical trials and clinical studies, or research protocols for securing FDA approval.
  2. Project designed to diagnose diseases or conditions or to determine molecular factors related to diseases, OR
  3. Project to develop a product, process, or technology to further the delivery or administration of therapeutics.
QTDP expenses are broadly defined as:
  1. “Costs paid or incurred for expenses necessary for and directly related to the conduct of a QTDP”.
  2. But do not include certain key employee compensation, interest expense, or facility maintenance expenses.
  3. Expenses claimed as QTDP cannot also be claimed for the Research Credit.
Selection Criteria for Qualified Projects:
  1. Reasonable potential to:
    • result in new therapies to treat areas of unmet medical need or to prevent, detect, or treat chronic or acute disease and conditions,
    • reduce long-term health care costs in the United States, or
    • to significantly advance the goal of curing cancer within a 30-year period, AND
  2. Take into consideration projects would have the greatest potential to:
    • create and sustain (directly or indirectly) high quality, high-paying jobs in the United States, and
    • to advance US competitiveness.
  3. IRS must, in consultation with HHS, develop a qualifying therapeutic discovery project program to consider applications by May 23.
Additional information is to be published by mid to late May on the following sites:

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