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The Black Hole

The New York Times ran a front-page story in July about the Institute for One-World Health, a non-profit drug company formed to get governmental approvals for pharmaceuticals known to be effective in treating neglected diseases. The non-profit had identified paromomycin as a cure for black fever (visceral leishmaniasis), a disease that kills about a half million people annually, and was seeking tax-exempt status to help raise money for the effort. Its mission was to fill the gap created by for-profit drug companies, which do not invest in drugs that are unlikely to generate profits. Paromomycin has not received government approval because no drug companies have sought it--as most black fever sufferers are poor and could be cured by a $10 course of the drug.

One-World Health's founder, Dr. Victoria Hale, faced many obstacles, one of which was the IRS. The agency refused to approve her application for tax-exempt status three times. According to Dr. Hale, the IRS was suspicious her charity was really just an attempt by the drug industry to shelter profits. In its third refusal, the IRS staff told her One-World's activities were no different from those of for-profit drug companies (and, in truth, they are not), and that they wouldn't recognize it as tax-exempt unless she could think of an example of an existing charity that mirrored a for-profit business.


Bruce D. Collins

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