Bipartisan Bill Would Boost Private Giving to Medical Research
U.S. Newswire
27 Feb 10:00
Bipartisan Bill Would Boost Private Giving to Medical Research;
Hikes Deductibility Limit, Cuts Taxes on Stock-Option Gifts
To: National Desk, Heath, Medical and Congressional Reporters
Contact: Emily Tynes, 202-326-8700,
for the Institute for Civil Society
 
WASHINGTON, Feb. 27 /U.S. Newswire/ -- Efforts to combat cancer,
diabetes, Parkinson's and other diseases could get a billion-dollar
boost under a bipartisan bill announced today that would encourage
private donations to medical research through changes in federal tax
law.

The Medical Research Investment (MRI) Act, introduced by
Senators William Frist (R-Tenn.) and Robert Torricelli (D-N.J.)
and Representatives Jennifer Dunn (R-Wash.) and Benjamin Cardin
(D-Md.), calls for an increase in the limit on deductibility of
charitable contributions earmarked for medical research from the
current 50 percent of annual income to 80 percent. The Act also
changes the tax treatment of gifts of stock from incentive
stock-options plans, which currently may be subject to ordinary
income-tax rates.

"The field of medical research stands at the threshold of some
truly revolutionary breakthroughs, but federal support in that area
has declined as a portion of GNP," said Pam Solo, head of the
Institute for Civil Society (ICS), a Massachusetts foundation that
is a leading supporter of the legislation along with the Juvenile
Diabetes Foundation. "Meanwhile, our strong economy has improved
the ability of many Americans to give to charitable causes. If some
people are able and willing to do more for medical research, it's
in everyone's interest to encourage their generosity."

A study conducted last year for ICS by PriceWaterhouseCoopers
projected that if the MRI Act's increased deductibility provision
were in effect during 2000, private contributions in this year
would have increased four to 4.5 percent, or $180.4 million. Over
five years, the total increase would be $1.032 billion. The revenue
lost by the U.S. Treasury would be about one-third the amount of
new giving, assuming an average income-tax rate of 35 percent for
donors.

Institutional endorsements for the MRI Act have come from the
Alliance for Aging Research, American Association for Cancer
Research, American Autoimmune Related Diseases Association, ALS
Association (Lou Gehrig's Disease), American Society of Cell
Biology, Cancer Treatment Research Foundation, Coalition of
National Cancer Cooperative Groups, Cure for Lymphoma, Foundation
Fighting Blindness, Friends of Cancer Research, International
Foundation for Anticancer Drug Discovery, Juvenile Diabetes
Research Foundation International, The Michael J. Fox Foundation
for Parkinson's Research, Myositis Association of America, National
Alliance for the Mentally Ill, National Hemophilia Foundation,
National Infertility Association, National Mental Health
Association, Oncology Nursing Society, Phoenix House Foundation,
Prevent Blindness America, Research to Prevent Blindness, Society
for Women's Health Research, and United Cerebral Palsy.
A "Uniquely Opportune Moment"

A number of large-scale developments are converging to make this
a "uniquely opportune moment" for increased support of medical
research, Solo added. One is the range of advances promised by
recent research, especially in sequencing the human genome. Another
is the vast wealth being created in fields like computers,
telecommunications, biotech and finance. Despite the collapse of
stock prices in some sectors, many newly minted millionaires
continue to receive large incentive packages through company
stock-option plans.

But potential donors are sometimes discouraged to learn that a
gift of stock from a stock-option incentive plan may be subject to
a tax of nearly 40 percent because it is treated as regular income
if given within one year of exercising the option. "This is not a
rare phenomenon limited to dot-com entrepreneurs, " Solo said.
"Secretaries, truck drivers and even journalists are benefiting
from stock-option plans, and it makes sense to let them donate what
they can to support research that has the potential to help
everyone."

Medical research also has direct economic benefits that are
often discounted because of an aversion to putting a value on an
individual's life, Solo continued. "But there's no doubt that
increased longevity has meant increased productivity. One study by
Kevin Murphy and Robert Topel of the University of Chicago Business
School suggested that the change in life expectancy from 1940 to
1990 was worth $2.4 trillion per year to Americans."

She noted that a June 2000 editorial in the Economist reported
that in 1995, spending on medical research in the United States was
about $36 billion. "Even if only 10 percent of the increase in
longevity were down to medical research, it still adds up to $240
billion per year -- a spectacular return on investment," the
editorial said.

"Of course, if the life that is saved is your own or a loved
one's, there's no price tag that adequately reflects the value of
medical advances," Solo added.

The Toll of Disease
Despite the advances of recent decades, the toll of disease
remains staggering.
-- Sixteen million people in the United States have diabetes
mellitus. Diabetes is the leading cause of kidney failure,
blindness, and amputations, and is a major factor for heart
disease, stroke and birth defects. It shortens average life
expectancy by 15 years, and costs the nation in excess of $100
billion annually.

-- Cardiovascular diseases -- heart attacks and strokes --
claimed 953,110 lives in the United States in 1997. One-third of
these deaths were premature, i.e., before the end of normal life
expectancy. In 1996, 33.3 percent of all hospitalization
expenditures were made to Medicare beneficiaries for hospital
expenses due to cardiovascular problems.

-- More than half a million Americans are expected to die of
cancer this year, making it the second leading cause of death in
the U.S. Since 1990, approximately 13 million new cases have been
diagnosed. In 2000, about 1,220,100 new cancer cases were
expected.

-- Parkinson's Disease is estimated to cost the U.S. more than
$25 billion a year in direct health-related expenses, disability
costs and lost productivity.

Medical Research Has Big Paybacks for Everyone
According to a report on the benefits of medical research issued
in 2000 by the advocacy group Funding First, "the likely gains from
medical research are so extraordinarily high that the payoff from
any plausible 'portfolio' of investments in research would be
enormous. Medical research that reduced deaths from cancer by just
one-fifth would be worth $10 trillion to Americans -- double the
national debt, and infinitely larger than the nation's current
level of investment in various aspects of cancer research. Indeed,
the value of these 'payoffs' is steadily increasing, given the
nation's demographics and overall economic prosperity."
Consider the following tangible benefits of improved health and
longevity:
-- A child born in the United States in 1997 can expect to live
76.5 years, 3.9 years longer than a child born in 1975.
-- Increases in life expectancy in just the decades of the
1970's and 1980's were worth $57 trillion to Americans - a figure
six times larger than the entire output of tangible goods and
services last year.

-- Improvements in health account for almost one-half of the
actual gain in American living standards in the past 50 years.
-- A 17-year program that invested $56 million in research on
testicular cancer has led to a 91 percent cure rate and an annual
savings of $166 million.

-- Preventing hip fractures in post-menopausal women at risk for
osteoporosis saves $333 million annually.
-- Improvements in the prevention and treatment of illness also
lead to significant reductions in the cost of illness. A 1993
study identified 33 health care advances from NIH-supported
research that saved between $8.3 and $12 billion per year.
New discoveries in medical science are yielding more
opportunities in basic and clinical research than ever before,
specifically in areas such as DNA research, human and non-human
genomics, cell biology, molecular biology, neuroscience, computer
science and imaging technologies.

"We are entering an era of explosive growth in knowledge that
will greatly advance scientists' ability to understand disease and
find new cures, treatments and strategies to prevent disease," Solo
said. "The imminent historic breakthrough of identifying and
sequencing the human genome will usher in a revolution with the
potential to dramatically transform human health."
Private Contributions Will Leverage Public Aid to Medical
Research
Peter Lynch, Vice Chairman of Fidelity Management and Research
Company, wrote last year in a report called Exceptional Returns:
The Economic Value of America's Investment in Medical Research,
"Federal support for basic science has been declining as a
percentage of GDP since the mid-60's. Significantly increasing our
federal investment in basic medical and scientific research will
pay handsome dividends into the 21st century."

The opportunities for advancing knowledge of human health are
practically limitless, and government should encourage private
participation in transforming potential breakthroughs into reality,
Solo concluded. "The MRI Act will give donors greater freedom to do
their part in supporting critical research that will enhance the
nation's economic future and improve the quality of life for
everyone."
 
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