Answers - Finance

Given the fact that most seniors are interested in a secure income, reducing risk and lowering taxes, here is a planning technique to consider if you are trying to increase your income.

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

Maybe you have a CD that is coming up for renewal and you discover the rate is going to be lower. You could have some stocks or mutual funds that were invested for growth and are thinking

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

Examples of combination products may in

about selling some off and re-investing in something that would pay you an income. The only reason you haven’t sold them is that you don’t want to pay the capital gain.

I would suggest

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

including a charitable gift annuity in your list of options.

A charitable gift annuity is a combination of a gift to charity and an annuity. For older people, annuity rates may be 8%, 9%

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

or even higher. Since part of the annuity payment is a tax free return of principal, the gift annuity may provide you with a substantial income. The combination of partially tax free inco

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

Combination pro

me and the initial charitable deduction makes this planning device attractive.

While this arrangement has its own unique benefits, the rate of return is less than if you had bought a com

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

mercial immediate annuity. Therefore, your decision to use a gift annuity should include a desire to eventually leave money to a qualified charitable organization that you have an interes

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

t in, such as a church, school, hospital, etc.

Gift annuities are easy to set up. You simply transfer property to the charity and the charity promises to pay a given amount monthly, quar

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

erly, semi-annually or annually to you for as long as you live. Alternatively, you could elect to have the payments paid to you and another person for as long as you both live. Or you cou

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

ld elect to have the payments made to you for the rest of your life and then to the second person for the rest of their life. But the maximum number of people per gift annuity is two.

Gi

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

ft annuity rates are set by the American Council on Gift Annuities. Charities don’t have to use these rates, but most do. So you don’t have to out shopping for the best rate. Make your ch

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

Following aspects would a

oice based on the charity that you would like to support.

There are two tax issues that you should take into consideration when comparing a gift annuity to your other alternatives.

The

dd to the challenges in developing combination products:

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

irst is that if you fund the gift annuity with cash, part of the payment you receive is taxed (as ordinary income) and part of it is not taxed as it is treated as a return of principal. I

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

f you fund it with appreciated property, and are the recipient of the income, part will be taxed as capital gain, part as ordinary income and part could be treated as a return of principa

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

l and not taxed. However, if you live past your life expectancy, all later annuity payments will be ordinary income.

The second tax issue is that when you give the charity your asset in

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

exchange for a life income, you get a large income tax deduction. For most people, this income tax deduction is so big it cannot be taken in one year. So there are provisions to spread th

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

Professional from academic institutions, pharmaceutical industries, health care indust

deduction out over the year of your donation and five more. Your accountant can tell you if this will eliminate income taxes for the next 6 years or not. Chances are good that it will.

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

Please note that I am only giving general guidelines about taxation. Before you set up a gift annuity, you should sit down with your tax advisor to determine the exact tax ramifications f

.

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 your situation.

There are a number of charitable gift annuity options and applications. This brief overview has given you some of the basics. If this seems like it may fit, contact th

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

Companies that provide selfless information through particip

e charitable organization of your choice and get a proposal. Then sit down with your accountant and financial planner and have them help you compare a gift annuity with your other options

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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