Fed Funding: Some of the Basics of Federal Grants for Medical Devices

Medical Patents Broker Inc.
By Kenneth Pearce, President

Some, and maybe all the readers of this blog, are already familiar with Fed Funding. In the event that someone is unfamiliar with this road, some road signs follow.

It appears that most of these Federal grants are designed to bridge the gap from technology to market. The federal funding machine can sometimes work like this:

1. Available Sources of Seed Money

The most common vehicles for medical device funding are the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

• SBIR: Designed for small businesses to conduct R&D that has a high potential for commercialization.
• STTR: Requires the small business to formally collaborate with a research institution (like a university or federal lab).

2. Grants are Phased In

Generally, "We the People" do not fund these grants all at once. Availability of the money and the perceived risk of the invention can affect the outflow of those dollars. MPB’s current understanding is that the Grant Phases are not the same as the mandatory FDA Phases. Examples of Grant Phases are:

• Grant Phase I (Feasibility): Typically $50,000 to $275,000 for 6–12 months. The goal is to prove the scientific and technical merit of the invention.
• Grant Phase II (Development): If Grant Phase I is successful, you can apply for $750,000 to $1.8 million+ over 24 months to build prototypes and begin testing.
• Grant Phase III (Commercialization): There is no direct grant money here, but this phase involves shifting to private sector funding or federal production contracts.

In short, the buck stops at Grant Phase III. The megabucks to fund FDA trials and commercialization are not supplied by the Treasury. Assumption of great risk is required for marketability, and our government is unwilling to engage in such risk. Furthermore, innovators should be aware that the time required to navigate federal funding cycles can significantly consume the remaining effective life of a medical patent.

3. Zero In on the Correct Bullseye

Although all the grant money comes from the Treasury or debt instruments, the available supply is funneled through some of the following agencies:

• NIH (National Institutes of Health): The go-to for devices that improve human health (e.g., surgical tools, diagnostics).
• NSF (National Science Foundation): Best for high-risk, "deep tech" innovations that have broad applications beyond just one disease.
• War (The Department of War): Focuses on “warfighter” medicine—battlefield trauma, prosthetics, and portable diagnostics.

The Department of War receives more funding than the other agencies. Thus, there is more money to spend on the development of “battlefield medicine.”

4. If You Think Your Tax Return is Complicated, Get Ready for a Marathon

Before filing the application for the grant, a minimum of the following is needed. As you know, use of many federal government websites requires practice—and more practice—just in learning how to navigate to everything needed.

• SAM.gov Registration: You need a Unique Entity ID (UEI).
• Grants.gov Account: The central portal where all applications are submitted.
• ERA Commons (for NIH): A specific system for tracking health-related grants.

5. It’s Not Just Science

Is it possible that a governmental agency is more impressed with the commercialization plan than the scientific details? If the commercialization plan is not almost perfect, there is only a slim chance the grant will follow. Most people seem to like what they think is “free money.” Obtaining a grant is far from “free money.” And those who win the lottery still have to pay income tax in the highest bracket.

The Presidential Perspective It takes a special person to have the patience, the tenacity, and the repertoire to acquire federal money. And I am not one of those people. But maybe you have someone in your organization who is.