3:13 pm - Saturday December 17, 5064

Medical innovation‏

The United States has been the undisputed leader in medical research
for decades. But today, our leadership is at risk. Other countries are
working aggressively to lure high-paying biomedical jobs and lucrative
research facilities away from the U.S.

A new report by Battelle, an international science and technology
company, found competing nations are offering a friendlier regulatory
environment so research-based companies can get their products to
market faster. They also are offering incentives, such as lower taxes,
to boost private investment in biopharmaceutical research.

Meanwhile, our outdated regulations and burdensome taxes are actually
facilitating the drain. Once these jobs are lost, they will be
extraordinarily difficult to get back.

High corporate tax rates in the U.S., in particular, deter investment.
Our top corporate income tax rate is 38 percent compared to an average
of 15 percent in other countries.

Unfortunately, instead of reversing these destructive policies, the
U.S. has doubled down with new legislation -- the Affordable Care Act
(ACA) -- that will law will add additional layers of bureaucracy and
expense that will delay getting new medicines and medical products to
patients.

Developing a new drug now costs more than $1.3 billion and takes an
average of 12 years. Yet only a small percentage of new molecular
entities ever reach the market. Instead of mitigating the risks that
go along with these huge investments, the U.S. government has been
erecting ever higher hurdles for private investment.

Consider ZOLL Medical Corporation, a medical device company that now
finds itself in the bull's eye of the ACA. It imposes a 2.3 percent
tax on the gross revenue that medical device manufacturers collect --
revenue, not profits! This will increase ZOLL's tax rate to more than
50 percent, completely wiping out its R&D budget.

As ZOLL President Jonathan Rennert explained in a recent forum, "every
one of the jobs in our company is now in the United States. But [when
the medical device tax takes effect in 2013] we will have every
incentive to move jobs offshore ... the tax will lead to less
innovation, fewer jobs, and fewer lives saved."

In addition, many countries have instituted strong and permanent
incentives for research and development, but the United States has
kept its R&D tax credit "temporary" for decades. America now ranks
17th out of 21 countries in the Organization for Economic Cooperation
and Development in the effective rate of its R&D tax credit.

Our edge is not gone yet, but U.S. legislators must quickly act to
stop the drain. The United States produced more than half of the
world's new medicines over the last decade. Today, 12 of the top 20
medical device companies still are headquartered here. Last year, U.S.
companies had more than 3,000 new pharmaceutical products in
development.

This superior medical innovation not only creates life-saving drugs,
but boosts our economy. Battelle found the biomedical industry
contributed $917 billion to the U.S. economy in 2009 and supported
more than four million jobs.

Whether they're promoting healthy lifestyles or developing diagnostic
tests, American companies, large and small, still are working to drive
innovation in the medical field. Washington needs to enact reforms
that will allow their groundbreaking advances in the health sector to
continue.

As one example, companies are working with the FDA to improve clinical
trials so they can be smaller and better targeted, getting drugs to
patients faster. Pfizer, for example, was able to bring its newest
drug for lung cancer, Xalkori, to market in just four years using new
research models that target drug trials to patients genetically tested
to be most likely to respond. In one study reported at an American
Society of Clinical Oncology meeting, 60 percent of patients were
alive after two years, compared to only nine percent in historical
trials.

America's engine of medical enterprise has always been strong. But it
will eventually stall out in the face of competition from other
countries if Washington doesn't reverse its destructive regulatory and
tax policies.

Real solutions in the health sector have come not from government, but
from entrepreneurs working to find new treatments and improve care.
These are the people and companies who will bring transformational
change for the 21st century -- provided Washington gets out of their
way.

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