Biotech bill's provisions are blurry
Effect on companies from out of state may prove to be limited
When House lawmakers unveiled the latest version of the state's $1 billion life-sciences bill last week, a new wrinkle caught some Patrick administration and industry officials by surprise.
A provision in the bill would restrict some benefits to companies with a corporate or US headquarters in Massachusetts - apparently shutting out some of the state's largest life-sciences employers, including drug makers Wyeth and Novartis AG. Wyeth, for instance, has 2,700 employees in Massachusetts, but is based in New Jersey. Novartis, which has 2,000 employees in Massachusetts, has its global headquarters in Basel, Switzerland, and its US headquarters in New Jersey.
"We'd like to have more companies that have their headquarters here," said state Representative Daniel Bosley, a North Adams Democrat who helped craft the bill as chairman of the Legislature's Joint Committee on Economic Development and Emerging Technologies. Bosley said he thought locally based companies would be more likely to move other operations to the Bay State. "We're making an investment and we expect an investment back."
But after reading the bill closely, some observers say the impact could be muted. It turns out the restriction doesn't apply to the $250 million in tax benefits set aside to encourage companies to expand in Massachusetts over the next decade, but only to a narrower set of benefits.
Specifically, the restriction in the House bill applies to $45 million in "bridge loans" and assistance from the Massachusetts Life Sciences Center in setting up clinical trials. It also gives preference to companies with a local headquarters for research partnerships with state universities, job training programs, and access to prepermitted industrial land - but doesn't preclude nonlocal companies from receiving those benefits as well.
"It doesn't appear to be a significant issue for our member companies," said Michael D. Webb, chairman of the Massachusetts Biotechnology Council, a trade group that represents the state's biotech industry.
Webb said the companies potentially interested in bridge loans are typically smaller companies that are already based in Massachusetts, while larger companies care more about tax breaks and other help that isn't tied to the headquarters requirement.
In addition, some officials say it's possible companies could evade the requirement by setting up a Massachusetts subsidiary.
Bosley said he wasn't concerned. Even if a company creates a subsidiary based in Massachusetts, he said, "that helps to anchor the business here."
Peter Rosenblum, a lawyer with Boston-based Foley Hoag LLP, said the scope of the restriction ultimately depends on how the state regulations are crafted. The bill itself does not define what qualifies as a US or corporate headquarters.
Regardless, Webb, the biotech council chairman, said he was concerned the headquarters requirement could send a signal that Massachusetts doesn't want nonlocal companies. Webb said the state should focus on bringing jobs to the state - not the location of the corporate headquarters. "The bottom line is whether we are creating jobs in Massachusetts," he said.
Kofi Jones, a spokeswoman for the Executive Office of Housing and Economic Development, said the administration is still studying the provision. She noted the bill was just filed Friday.
Though the House made some changes to the legislation, including adding the headquarters requirement, the bill largely follows the outline of Governor Deval Patrick's original $1 billion proposal unveiled last year. Some details could still change, however, as the bill wends its way through the Legislature.
Lawmakers are expected to finalize the legislation in the next few weeks.
Todd Wallack can be reached at twallack@globe.com. 