BIO: What happened with the Orphan Drug Tax Credit

During a busy week in Congress, Democrats included a change to the Orphan Drug Tax Credit that would negatively impact research on rare diseases affecting millions of Americans.

The U.S. House of Representatives has several committees marking up the Senate’s $3.5 trillion budget reconciliation package. (Here’s BIO's readout, including news on drug price controls and the sustainable aviation fuel tax credit.)

There was an unwelcome surprise: Section 138141 (p.609) would make drug manufacturers ineligible to collect the Orphan Drug Tax Credit “if the drug had previously been approved by the Food and Drug Administration for a separate indication,” STAT News wrote.

“The ODTC can help to offset the cost of developing and testing orphan therapies as they move through the clinical trial process,” the National Organization for Rare Disorders said. “This longstanding incentive is particularly important for the many smaller companies focused exclusively on rare diseases.”

There are more than 7,000 known rare or “orphan” diseases, which combined affect 25-30 million Americans. Sadly, 95% have no treatment or cure — and if the provision is passed, R&D will be disincentivized further.

Before the credit, there were only a handful of treatments for rare disease patients. Now there are hundreds being developed. Take cystic fibrosis for example. The first treatment helped less than 1,000 patients. Today, 90% of CF patients have a life-changing therapy. If this provision were in place, thousands of those patients may not have a treatment option.

"The idea of taking away the Orphan Drug Tax Credit is certainly no surprise," said Rich Masters, BIO's chief public affairs and advocacy officer. "What is a complete surprise is that Congress would consider a move to destroy research into cures for vulnerable populations afflicted by rare diseases such as sickle cell and cystic fibrosis. We will be aggressively fighting back on behalf of patients in the rare disease community—just because their numbers are not huge doesn’t mean their suffering is any less real. It is shocking some Members of Congress would put those patients’ cures at risk."