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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." http://www.usnewswire.com/topnews/Current_Releases/0227-105.html ***********