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Title: Blog by Novelist William S. Frankl, MD

Taxing The Life Out Of Innovation

A number of medical devices makers are concerned that new taxes will starve them of funds for new research and even could put some of them out of business, according to Grace-Marie Turner, president of the Galen Institute.

1. Richard Packer, CEO of Zoll Medical Corp. says a 2.3% tax on medical devices in ObamaCare will increase his company’s tax bill by $7.5 million. Like many companies in medical device innovation, Zoll Medical is not a corporate giant. It had a profit of only $9.5 million last year. Therefore, this new tax could eliminate nearly 80% of its profits, leaving the company almost no money to invest in research and development.

2. Medical device and pharmaceutical research are among the most costly and risky investments in the health care field. The pharmaceutical industry spent almost $59 billion on research and development in 2007, but only 24 new drugs were approved last year. For every 5,000 to 10,000 compounds tested, only about 5 will make it to clinical trials. Of those 5, just one will get FDA approval. And just 2 out of every 10 drugs that reach the market will recoup the costs invested in creating and developing the drug.

Thus, government support is crucial and should not undermine innovation in lifesaving and life-enhancing medicines and technologies.  Policies that tax the money companies spend on medical research will decrease the quality of care for this generation and future generations.

Source: Grace-Marie Turner, “How Much Is Two More Years of Life Worth?” Washington Times, October 14, 2010 : http://www.washingtontimes.com/news/2010/oct/14/how-much-is-two-more-years-of-life-worth/

2 Responses to “Taxing The Life Out Of Innovation”

  1. Shalonda Mengwasser Says:

    Thank you for this great article! It has been extremely insightful. I wish that you will continue sharing your wisdom with us.

  2. DANIEL GARSHMAN Says:

    WELCOME TO THE CURRENT ADMINISTRATION’S SPEND & TAX POLICY!
    IS IT ANY WONDER THAT OUR UNEMPLOYMENT RATE IS SO HIGH, & OUR COUNTRY IS A DEBTOR NATION AS ARE THIRD WORLD COUNTRIES. MY HOPES ARE THAT SOME ENLIGHTENMENT COMES TO WASHINGTON AFTER THE BEGINNING OF 2011, & THAT WE CAN START ON A NEW PATH TO ENLIGHTENMENT TO CORRECT OUR CURRENT DILEMMA.

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