Advice Pool - Legal

Estate tax, or the death tax as it is sometimes referred to, is an issue often bandied about at election time. If the innuendoes of the sound bites are to be believed, the inst

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ant someone dies, the government collects a huge amount of tax from the estate just as a general principle. The specter of estate tax is looming in the corner of every hospital

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

room in America, or so goes the story, waiting to deprive widows of their husbands’ hard-earned pensions and children of their college funds, if Mr. X is not elected to Congress

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

or the White House.

While it is true that a decrease in estate tax benefits the wealthiest two percent of Americans, it is also true that only the wealthiest two percent of Ame

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

icans are subject to estate tax to begin with—at least under present law.

Estate taxes are taxes assessed on property transferred at the time of death. They are based on the g

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ross estate, including real estate, insurance, trusts, annuities, cash, business interests, securities, and all other assets. The items are not assessed at their value at the t

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

me they were purchased, but rather at their fair market value at the time of death. For example, if you purchased a home for $50,000 in 1970 and the value of the property has a

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

preciated in the meantime to be worth $175,000 based on sales of comparable properties in the same neighborhood, estate taxes would be assessed on the present worth of $175,000.

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

Once the gross estate is calculated, applicable deductions are subtracted from that value. Deductions include property that passes to surviving spouses, mortgages and other de

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

bts, and estate administration expenses. In some cases the value of operating business interests or farms may be reduced, according to the IRS, “for estates that qualify.” The

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

value arrived at after deductions is referred to as the “taxable estate”. Lifetime gifts are added back in and an available unified credit is applied before the estate tax is ac

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ually assessed. The good news for most of us is that your taxable estate, as an individual, must exceed $1,000,000 for estate tax to apply, as the law currently stands.

The fed

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ral Tax Act of 2001 changed several provisions of the law regarding estate taxes. The rate at which estate taxes were assessed in 2001 was 55% of the gross estate less all appl

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

icable exemptions. The 2001 Tax Act began stepping estate taxes down gradually in 2002 to the present rate of 46% in 2006 and on down to 0% in 2010.

The premise behind the 200

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

Tax Act is that some of the revenue lost to the U.S. Government through reduction and eventual abolishment of the estate tax will be recouped by capital gains taxes that your h

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

irs will have to pay if and when they dispose of the property bequeathed to them. Prior to 2001, heirs automatically received a “full basis step-up” to fair market value on inh

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

rited property and did not have to pay capital gains tax when they sold the property. At present, heirs do not enjoy that benefit. If, for example, you paid $60,000 for five a

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

cres of land in 1965 and you leave it to your son or daughter when you die. The son or daughter sells the land for $200,000 in 2006 and has to pay capital gains tax on $140,000

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

or the difference between what you paid for it at the time of purchase and the fair market value at the time it was sold.

Needless to say, estate tax issues are extremely comp

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

icated and, if you fall into the category of wealth that would require payment of estate taxes on your demise, be sure to discuss them with your attorney or other estate planner

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Investing or trading has always been dominated by emotions and always will be. My thinking in starting www.marketthoughts.com has always been that that if I can get my readers to buy in now, it will be a much easier decision for them to sell and hold cash once the DJIA reaches 11,000 or 12,000 or so - as opposed to being in cash and staying out for the rest of this secular bear market.

When you are in a bind and have a financial emergency a payday loan can be a real help in these situations.

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