Public Health Service

National Institutes of Health

Bethesda, Maryland 20892

JUN 28 2005

The Honorable Hector V. Barreto


United States Small Business Administration

409 Third Street, S.W. Washington, DC 20416-0001

Dear Administrator Barreto:

I am writing to express concern that current Small Business Administration (SBA) limits on eligibility for Small Business Innovation Research (SBIR) awards, in the context of biomedical and public health research, unduly restrict the ability of the National Institutes of Health (NIH) to fund high quality, small companies that receive venture capital (VC) investment. As a result, NIH must turn away many deserving applicants, and the goals of the SBIR program are being undermined. I ask that you consider a waiver to enable NIH to remedy this problem and look forward to discussing it with you.

The legislation establishing the SBIR program was signed into law on July 22, 1982, by President Reagan. As stated in the SBA’s SBIR Program Policy Directive, “the statutory purpose of the SBIR program is to strengthen the role of innovative small business concerns (SBCs) in federally-funded research or research and development (R/R&D). Specific program purposes are to:

  1. stimulate technological innovation;

  2. use small business to meet Federal R/R&D needs;

  3. foster and encourage participation by socially and economically disadvantaged SBCs, and by SBCs that are 51 percent owned and controlled by women, in technological innovation; and

  4. increase private sector commercialization of innovations derived from Federal R/R&D, thereby increasing competition, productivity and economic growth.”

Consistent with these goals, the NIH SBIR program supports a wide array of biomedical and public health R/R&D activities of small, innovative firms. But, in today’s high risk biomedical research environment, in areas such as drug development, drug discovery, and therapeutics, fewer than one percent of the innovative, promising projects reach the marketplace. Research in public health and biotechnology is characterized by the following features:

  • High and intense capital needs (i.e., up to $1 billion) to see a product from idea to market;

  • Unusually long development lime (i.e. 5-12 years);

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