Update: Deadline for signatures EXTENDED to close of business Monday, October 25, 2021
Rep. Gottheimer of New Jersey has drafted and is gathering signatures for a letter to House leadership urging them to oppose the harmful changes to the Orphan Drug Tax Credit.
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The orphan drug tax credit is crucial to assist and encourage pharmaceutical companies to develop therapies for rare diseases!
- An Orphan Drug is a pharmaceutical that is created in order to treat a rare disease. The orphan drug tax credit (ODTC) is a federal tax credit available to life science companies working to find cures for diseases that affect small populations. The credit is designed to encourage the development of treatments for rare diseases.
- Between 1983 and 2018, the orphan drug tax credit provided a 50% credit for qualified clinical trials with human subjects, and research grants to promote the development of new treatments for orphan diseases.
- A 2017 overhaul of the tax code under the Trump administration reduced the credit from 50% to 25% beginning in 2018.
- The ODTC has led to approvals for more than 780 products to treat more than 250 rare diseases (most of which are cancer treating therapies). However, there are more than 7,000 rare diseases and only a few hundred have therapies that are indicated for their disease.
- The central rationale behind this piece of legislation was to provide an incentive to invest resources into developing drugs to treat an extremely small patient pool
- Since the FDA grants orphan drug status to a specific use of a particular drug, it’s possible to obtain orphan drug status for multiple uses of the same drug.
On September 13th, the House Ways and Means Committee released a first draft of the tax provisions to be included in the Biden Administration Build Back Better Act. It has a provision that would amend the Orphan Drug Tax Credit (ODTC) in ways that would severely undercut the original goal of the 1983 Orphan Drug Act. Section 138141 of the Build Back Better Act would remove the pharmaceutical tax credit for all but the first approved orphan use of a new drug. There was a push at this week’s committee meeting to take out that provision, but it failed. Rare Disease Advocacy organizations and patients are meeting with Members of Congress and staff to advocate for the removal or refinement of this provision to ensure it does not hurt communities that would benefit from further study and approval of an on-market therapy.