Compounding R&D Tax Credits

Compounding pharmacies are continually investing in R&D. Those research activities help them modify medicine formulations to meet the unique needs of various patients. Consequently, all the activities they conduct and the time they spend creating new or upgrading existing drugs qualify them for state and federal tax incentives.

In other words, companies researching novel and more complex compounded meds can obtain a tax return from the Compounding research and development tax credit. It usually covers a maximum of 22% of research costs, but the company location will ultimately affect the actual sum.

Qualifying Costs and Activities

The following activities may make your pharmaceutical company suitable for the Compounding R&D tax credit:

• Evaluating the efficacy and stability of new formulations;

• Developing and testing novel drug combinations that are not yet commercially available;

• Creating different testing methods;

• Modifying medications to become suitable for people with sensitivities and allergies;

• Introducing new methods for medication delivery (for instance, transdermal patches, pellets, etc.);

• Increasing product shelf life.

Industry-specific QREs include:

• Assessing the proper dose and method of administration;

• Testing active ingredients and excipients;

• Solubility;

• Supplies;

• Raw materials;

• Salaries for subcontractors;

• Salaries for QA and QC analysts, analytical chemists, project managers, C-suite, pharmaceutical chemists, formulation scientists, and compounding pharmacists and pharmacy technicians;

The claiming process for the R&D tax credit in the Compounding industry can be a bit complex. For that reason, we provide any kind of assistance you might need — from calculating your potential benefit to helping you apply. Feel free to contact us and book an appointment.

FAQs

What kind of companies can apply?

Compounding pharmacies that conduct qualifying research activities.

What data do I need to calculate credit?

Claim period gross receipts.

What information do I need to provide?

General ledger expense detail, payroll records, project notes, project lists, emails, purchase orders, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.