[Congressional Record Volume 144, Number 56 (Thursday, May 7, 1998)]
[Extensions of Remarks]
[Page E793]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   MEDICAL INNOVATION TAX CREDIT ACT

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                          HON. SANDER M. LEVIN

                              of michigan

                    in the house of representatives

                         Thursday, May 7, 1998

  Mr. LEVIN. Mr. Speaker, I rise today, along with my colleague Sam 
Johnson, to introduce legislation that would make it easier for medical 
schools, teaching hospitals, and not-for-profit hospitals in the United 
States to conduct potentially life-saving medical research. The 
enactment of the Medical Innovation Tax Credit would provide an 
important incentive for companies to fund more clinical research at 
these institutions. This bill would establish an incremental, 20 
percent tax credit in a new section of the Internal Revenue code for 
companies that conduct clinical testing research activities at U.S. 
medical schools and teaching hospitals. To get the tax credit, 
companies would undertake clinical testing activities at defined 
academic institutions: medical schools, teaching hospitals owned by, or 
affiliated with, an institution of higher education, and charitable 
research hospitals designated as cancer centers by the National Cancer 
Institute of the National Institute of Health. No tax credit would be 
available for clinical research activity conducted outside the U.S.
  This proposal comes at a time of substantive upheaval and 
transformation in our nation's health care system. As we all know, our 
medical schools and teaching hospitals are the backbone of innovation 
in American medicine. They are the places where scientific discovery 
intersects with patient care and medical and health professions 
training. But today these institutions are facing significant financial 
challenges due to fundamental changes in the health care system. 
Whereas medical schools and teaching hospitals used to be able to fund 
some research from excess patient care revenues, in the new competitive 
environment these institutions can no longer command higher prices from 
insurers simply because they fulfill the unique and critical missions 
of research and education. Additional private sector investment in our 
Nation's research and development is needed so medical schools and 
teaching hospitals can continue to fulfill their social missions.
  I am concerned that while the clinical research market is booming, 
medical schools and teaching hospitals are losing market share for 
clinical testing research activities. The Medical Innovation Tax Credit 
would provide some assistance to these institutions, but would also 
stimulate them to continue improving their efficiency in operating the 
clinical research enterprise. And since the tax credit is narrowly 
tailored, its potential cost to the government is relatively small.
  We need some way to help these institutions that is market-based and 
incentive driven. This proposal presents a creative way to encourage 
companies to conduct more clinical trials in the United States. It will 
arrest the declining share of trials conducted at these institutions 
and help alleviate some of the financial pressures they are 
experiencing. The Medical Innovation Tax Credit will provide needed 
resources for medical schools and teaching hospitals to maintain the 
robust research base necessary for high quality health-oriented 
education. Finally, it will strengthen the intellectual partnership 
between the private sector and medical schools and teaching hospitals 
to help ensure America's continued world leadership in research and 
innovation. I am proud to introduce this legislation and urge my 
colleagues to support a measure that will benefit all Americans.

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