SECTION 12. PAPERWORK

REDUCTION ACT

The collection of information contained in this notice has been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507) under control number 1545–2175.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this notice are in sections 5, 6, 7, 8, and Appendix A of this notice. Form 8942, Ap- plication for Certification of Qualified In- vestments Eligible for Credits, will be used to collect the information in sections 5, 6, 7, and 8. This information is required to obtain an allocation of qualifying therapeutic discovery project credit or grant. This information will be used by the Service to verify that the taxpayer is eligible for the qualifying therapeutic discov

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APPENDIX A

APPLICATIONS FOR CERTIFICATION OF QUALIFIED INVESTMENTS ATTRIBUTABLE TO

QUALIFYING THERAPEUTIC DISCOVERY PROJECTS

The Internal Revenue Service (Service), in consultation with the Department of Health and Human Services (HHS), will select for certification applications from eligible taxpayers under § 48D(c)(2) of the Internal Revenue Code (Code) for one or more projects that are qualifying therapeutic discovery projects under § 48D(c)(1) and that meet the selection criteria in § 48D(d)(3)(A) and (B).

This Appendix A:

1. Describes the content and format of information to be provided by an applicant for certification,
2. Provides the questions that must be answered in a Project Information Memorandum to be filed with the applicant’s Form 8942, “Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Thera- peutic Discovery Project Program,” and
3. Identifies the evaluation criteria to be used by the Service and HHS in the review of applications for certification.

The Service and HHS reserve the right to request clarifications and/or supplemental information from some or all applicants through written submissions and/or oral presentations. No additional written submissions, or requests to make oral presentations, will be accepted if not explicitly solicited by the Service or HHS. It is expected that the Service and HHS will determine whether to approve an application at any time after the application has been received without any further exchanges or discussions with the applicant. Therefore, all applicants are advised to submit complete and fully responsive applications.

Applications will not be returned to applicants.

SUBMISSION INFORMATION FOR CERTIFICATION

A. General

A complete application for certification includes Form 8942, completed in accordance with instructions, an attached Project Information Memorandum as described below, and, if the applicant elects to consent to certain limited disclosure (see Section 10.2 of Notice 2010–45 (Notice)), a properly executed copy of the “Consent to Public Disclosure of Certain Qualifying Therapeutic Discovery Project Program Application Information” (Consent) contained in Appendix B to the Notice. A complete application must be submitted for each qualifying therapeutic discovery project that the applicant sponsors for which the applicant is requesting a credit or a grant. All applications shall be prepared in accordance with this Appendix A in order to provide a standard basis for review and to ensure that each application will be uniform as to format and content.

Each application should clearly respond to each question to demonstrate the applicant’s capability, knowledge, and experience regarding the requirements addressed herein.

Applicants should fully address the requirements of the notice, including this Appendix A, and should not rely on the presumed background knowledge of reviewers. The Service and HHS may reject an application that does not follow the instructions regarding the organization and content of the application when the nature of the deviation and/or omission precludes complete or meaningful review of the application.

B. Unnecessarily Elaborate Applications

Brochures or other presentations are not permitted as part of the application and will not be considered.

C. Application Submission for Certification

An application for certification will not be considered in the primary allocation round for the taxpayer’s 2009 and 2010 taxable years unless the application is filed by July 21, 2010. (See section 5.02(2) of the Notice.)

D. Final Application Content, Format, and Evaluation

This section describes the information to be submitted by the applicant for certification on Form 8942 and in the Project Information Memorandum.

Part I: Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program

The applicant must submit a Form 8942 in accordance with the instructions to the form. The Form 8942 will require the following information:

1. The applicant’s general information, including the applicant’s name, address and taxpayer identification number.

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2. The name of a contact person for the applicant. The contact person is the person whom the Service or HHS may contact if there is an issue with the application. If the contact person does not have legal authority to bind the applicant, the applicant must attach to Form 8942 a properly executed power of attorney on Form 2848, “Power of Attorney and Declaration of Representative.”

3. The type of entity of the applicant.

4. The ownership of the applicant.

5. The number of full-time and part-time employees employed by the applicant.

6. Whether the applicant is requesting a grant in lieu of a qualifying therapeutic discovery project credit.

7. A description of the applicant’s qualified investments for 2009, 2010 or both, as applicable, and the amounts thereof. Such qualified investments may include expenses for wages, supplies and lab costs, depreciable property, contractor costs, and any other costs that would be considered part of the qualified investment for the project. (See section 4.01 of the Notice.)

8. The number of full-time and part-time employees in the United States whose work is directly billed to the project and the average salaries of the employees in each category. For this purpose, both actual employees of the applicant and leased employees may be included. The Service will review the information described in this paragraph 8 in order to determine (as described in section 5.01(3) of the Notice) which projects have the greatest potential to create and sustain (directly or indirectly) high quality, high-paying jobs in the United States.

9 The number of contractors in the United States paid for work on the project, and the average monthly compensation and average monthly hours of the contractors. The Service will review the information described in this paragraph 9 in order to determine (as described in section 5.01(3) of the Notice) which projects have the greatest potential to create and sustain (directly or indirectly) high quality, high-paying jobs in the United States.

10. Whether, as of the date on which the application is submitted, the project is active, terminated, or suspended and, if the project is terminated or suspended, whether this is because the project failed a clinical trial, failed a pre-clinical research milestone, or failed to secure FDA licensure. The Service will review the information described in this paragraph 10 in determining (as described in section 5.01(3) of the Notice) which projects have the greatest potential to advance United States competitiveness in the fields of life, biological, and medical sciences. A project that has been terminated or suspended because the project failed a clinical trial, failed a pre-clinical research milestone, or failed to secure FDA licensure will be determined to have insufficient potential to advance United States competitiveness in the fields of life, biological and medical sciences and thus will be determined to be ineligible for certification.

11. Whether the project:

a. Will produce a new or significantly improved technology, or a new application or significant improvement to existing technology, as compared to commercial technologies currently in service; and

b. Is expected to lead to the construction or use of a contract production facility in the United States in the next 5 years.

The Service will review the information described in this paragraph 11 in determining (as described in section 5.01(3) of the Notice) which projects have the greatest potential to advance United States competitiveness in the fields of life, biological, and medical sciences.

Form 8942 will also contain a Penalties of Perjury Statement. Each applicant must sign and date this statement. The person signing for the applicant must have personal knowledge of the facts. Further, the declaration must be signed by a person authorized to bind the applicant. The Penalties of Perjury statement is effective for ALL information submitted as a complete application.

Part II: Project Information Memorandum

HHS will review information provided by the applicant in the Project Information Memorandum in order to determine whether a project meets the definition of “qualifying therapeutic discovery project” and whether the applicant has demonstrated that its project shows a “reasonable potential” to meet one or more of the goals specified in the statute.

The Project Information Memorandum must follow the format specified herein. It must contain the questions specified and the answers as to which the applicant must check yes or no. The form also requires, as stated, that the applicant provide written narratives with respect to certain questions, including narratives supporting and explaining the basis for each yes answer. The statements included in the Project Information Memorandum shall not exceed the stated word limits. If statements exceed the stated word limits, words beyond those limits will not be considered. Statements that otherwise fail to comply with the instructions set out in the application will not be considered. All text shall be typed, single spaced, using 12 point font, 1 inch margins, and unreduced 8 ¹ /2 inch by 11 inch pages (A Project Information Memorandum that is submitted using the form provided on the IRS website will be deemed in compliance with spacing, font, margins, and page size requirements with regard to the information submitted on such form). All applications shall be legible. Pages shall be sequentially numbered and identified with the name of the applicant and the date. No material may be incorporated in any application by reference.

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Note : Any language beyond any word limits in the application will be disregarded for purposes of review.

If elements of the Project Information Memorandum contain information the applicant considers to be trade secrets, confidential, privileged or otherwise exempt from disclosure under the Freedom of Information Act (FOIA, 5 U.S.C. 552), the applicant shall assert a claim of exemption at the time of application by placing the following text on the first page of the Project Information Memorandum, and specify the page or pages of the application to be restricted.

“The data contained in pages [ ] of this document which hereby forms a part of the application have been submitted in confidence and contain trade secrets or proprietary information, and such data shall be used or disclosed only for review purposes. This restriction does not limit the government’s right to use or disclose data obtained without restriction from any source, including the applicant.”

To further protect trade secret, confidential, privileged or otherwise exempt information, each line or paragraph on the page or pages containing such data must be specifically identified and marked with text that is similar to the following:

“The following contains proprietary information that [name of applicant] requests not to be released to persons outside of the Government, except for purposes of review.”

Note : Any text used to protect confidentiality will not be counted against the total word limits of the Project Information Memorandum.

Project Information Memorandum

A. Provide an overview of the project for which you are seeking a credit or grant, including a description of the product, process or technology under development. The description may not exceed 250 words. If the project involves a new therapy, the description must include an explanation of why that therapy is novel.

B. Check each applicable box in the following and provide a short (not more than 50 words) statement supporting each positive assertion ( i.e., where “Yes” is checked). Check all that apply, but you need check only one Yes for answers 1 through 4 for initial qualification.

Qualifying Therapeutic Discovery Project definition

1. Is the project

4. Is the project designed to develop a product, process, or technology to further the delivery or administration of therapeutics?

6. If the answer to question 5 is Yes, are the new therapy(ies) expected to:

For each of questions 9, 10, and 11, provide a short statement, not to exceed a total of 250 words, including responses to bulleted items. For question 9, applicants may also submit up to five literature citations in the specified format that will not be counted against the 250-word limit.

9. Explain the scientific rationale, based on prior conceptual and empirical work, which supports the belief that the proposed project will lead to the outcome the applicant has identified above. Explain the research and development plan that will lead

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to the outcome identified above. Describe the scientific evidence relied on by the applicant, including a description of any peer review of the project and a list of no more than five literature citations using the following format:

title, book title, volume number, page numbers, and year of publication.

the NIH Manuscript Submission reference number ( e.g., NIHMS97531) or the Pubmed Central (PMC) reference number ( e.g., PMCID234567) for each citation.

online format should include URLs or PMCID numbers along with the full reference. The references should be limited to relevant and current literature.

10. Describe the stage of development of the project, including a description of pre-clinical and clinical trial results that are relevant to the proposal.

nation of whether an investigational new drug application or an investigational device exemption has been filed with the Food and Drug Administration, and whether an application for approval, license, or clearance has been filed, and, if so, the status of that application as of the date of application as of the date this project information memorandum is submitted.

the number of subjects tested in each phase and information about trials for which the applicant is actively recruiting subjects. Summarize the results of the trails, noting any failed trials or successful trials.

development of the project, including timelines and milestones planned and completed.

11. Describe the resources, management experience and organizational capacity of the applicant and explain how applicant believes that such resources, experience and capacity will support successful completion of the project. Include in this description

temporary or permanent. If the project has been suspended, terminate, or is otherwise inactive, explain why, including whether the cause is a lack of financial resources or other reasons.

Evaluation Criteria and Factors for the Project Information Memorandum

HHS will make the determination described in sections 5.01(1) and (2) of the Notice based on the information provided in the Project Information Memorandum and on the following eligibility and evaluation criteria and factors:

Definitions

A project that does not meet the definition of “qualifying therapeutic discovery project” will be found to be ineligible. A project that does not support an affirmative response to any of questions 1 – 4 does not meet the statutory definition of a qualifying therapeutic discovery project. The applicant must effectively support each yes answer through the accompanying narrative.

Question 1 focuses on the requirement of § 48D(c)(1)(A) of the Code. To satisfy this provision, the project must be designed to treat or prevent diseases or conditions. It must be designed to do so by conducting pre-clinical activities, clinical trials, or clinical studies or carrying out a clinical protocol. It must also be for the purpose of obtaining approval of a product under one of two statutory provisions—Section 505(b) of the Federal Food, Drug, and Cosmetic Act (FFDCA) (a new drug application) or Section 351(a) of the Public Health Service Act (PHSA) (a biologic license application) . For example, a medical countermeasure against a known threat or emerging infectious disease that is developed for the purpose of securing approval under one of these provisions would satisfy this provision.

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Note that generic drugs, which are approved under Section 505(j) of the FFDCA, and biosimilar products, which are approved under Section 351(k) of the PHSA, would be excluded. Dietary supplements and most cosmetics would also be excluded because they are generally not the subject of a new drug or biologic license application.

Questions 2 and 3 focus on the requirements of § 48D(c)(1)(B) of the Code. This provision covers two separate categories of products. The first, covered by question 2, is a product to diagnose a disease or condition. Any product that diagnoses a disease or condition would meet this criterion, whether or not it determines molecular factors or is a molecular diagnostic. Relevant products would include point of care diagnostics for infectious agents.

Question 3 covers a product that determines molecular factors related to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions. This might include, for example, a test that would determine which patients with a particular disease or condition would be likely to respond best to a particular drug or device.

Question 4 focuses on the requirement of § 48D(c)(1)(C) of the Code. To qualify under question 4, a product, process, or technology must further the delivery or administration of therapeutics. For the purposes of § 48D(c)(1)(C), the term “therapeutics” means drugs or medical devices, as those terms are defined in Section 201(g) and (h) of the FFDCA, 21 U.S.C. 321(g) and (h). Biologics that are licensed under the PHSA will generally be either drugs or medical devices. Thus, a drug-eluting stent or infusion pump would be an example of a product that furthers the delivery or administration of a drug and would meet the requirements of this provision. However, a medical device, or other product, process or technology that does not further the delivery or administration of a drug or medical device would not meet the requirements of this provision because such products do not deliver or administer a therapeutic within the meaning of § 48D(c)(1)(C). The term “therapeutic” is narrower than the term “therapy,” which appears elsewhere in section 48D. Therefore, products, processes or technologies that deliver other therapies which are not therapeutics, such as speech, physical, and cognitive therapies, would for the same reasons be excluded.

Reasonable potential selection criteria

If HHS determines that a project meets the definition of “qualifying therapeutic discovery project,” HHS will proceed to determine whether the applicant has demonstrated, through responses to questions 5–11, that its project shows a reasonable potential to meet a statutory goal. This determination will be based on an evaluation of whether the project is designed to achieve one or more of the goals specified in section 48D and, if so, whether the applicant has shown a reasonable potential to achieve the goal(s). Specifically, the applicant must show that its project is designed to achieve one of the statutory goals by checking yes for one or more of the following:

In addition, the applicant must effectively support each yes answer through the accompanying narrative.

Question 5 addresses the requirement of § 48D(d)(3)(A)(i) of the Code that, to satisfy the statutory goal of that provision, the project must be a “new therapy.” Thus, the therapy must be novel and cannot be the same as, or difficult to meaningfully distinguish from, a therapy currently on the market. For example, this means the therapy should not be in the same class as existing therapies, unless such therapy is expected to offer a significant enhancement in safety or effectiveness. HHS will evaluate the information provided as to the novelty of the product based on the explanation provided with any Yes response to this question and the initial narrative description of the project (Section A of the Project Information Memorandum).

Question 6 addresses the requirement of § 48D(d)(3)(A)(i) of the Code that a new therapy either treats areas of unmet medical need, or prevents, detects, or treats chronic or acute diseases or conditions. For example, unmet medical needs would include novel influenza vaccine technologies, broad spectrum anti-viral medications, novel antibiotics, and platform vaccine technologies. In addition to new therapies that treat diseases and conditions, such products that detect or prevent diseases and conditions are also covered by this provision.

Question 7 addresses the requirement of § 48D(d)(3)(A)(ii) of the Code, which covers projects that will reduce long-term health care costs in the United States. The narrative accompanying any Yes response should explain how the project is likely to reduce health care costs, including a description of how the project will lead to actual cost reductions, not just substituting one cost for another and the basis of this determination. The narrative should provide a reasonable estimate of savings and demonstrate a reasonable potential to achieve these savings.

Question 8 addresses the requirement of § 48D(d)(3)(A)(iii) of the Code, which covers projects that will significantly advance the goal of curing cancer within the next 30 years.

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If HHS determines that the applicant satisfies the requirements to which questions 5 through 8 are addressed, regarding the specific statutory selection criteria, HHS will proceed to review the responses to questions 9–11 and evaluate whether the information provided supports a determination that there is a reasonable potential that the project will achieve one or more of the statutory goals. HHS will make this determination based on an analysis of the scientific rationale for the project (question 9), the current stage of development of the project (question 10), and the evidence that the applicant has the capacity to bring the project to fruition (question 11). HHS will notify the Service of the results of the HHS evaluation as to whether the project is a qualifying therapeutic discovery project and shows a reasonable potential to achieve one or more of the statutory goals.

E. Certification

Only those qualifying therapeutic development projects that have both (a) a reasonable potential to achieve one or more of the statutory goals set forth in section 48D(d)(3)(A) as determined by HHS and (b) the greatest potential to (i) create and sustain (directly or indirectly) high quality, high-paying jobs in the United States, and (ii) advance United States competitiveness in the fields of life, biological, and medical sciences as determined by the Service will receive a certification for all or a portion of their qualified investment. The Service will certify an amount of qualified investment made by an eligible taxpayer for qualifying therapeutic development projects in accordance with the provisions of section 5.02(5) through (7) of the Notice.

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APPENDIX B

CONSENT TO PUBLIC DISCLOSURE OF CERTAIN QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM

APPLICATION INFORMATION

In the event that the Application for § 48D Certification of [insert name of applicant-taxpayer here):

] (the Applicant-Taxpayer) for an allocation of qualifying therapeutic discovery project credit under § 48D of the Internal Revenue Code is approved, the undersigned authorized representative of the Applicant-Taxpayer hereby consents to the disclosure by the Internal Revenue Service of the type of the project that is the subject of the Application for § 48D Certification. The undersigned understands that this information might be published, broadcast, discussed, or otherwise disseminated in the public record.

This authorization shall become effective upon the execution thereof. I certify that I have the authority to execute this consent to disclose on behalf of the taxpayer named below.

Date: Signature:

Print name:

Title:

Name of Applicant-Taxpayer:

Taxpayer Identification Number:

Taxpayer’s Address: