Drug and biotechnology companies researching treatments for rare diseases would lose a tax incentive that helps lower the cost of their drug development programs under the Republican tax bill unveiled on Nov. 2.
Under current law, drug manufacturers can claim a tax credit for 50% of the costs of clinical testing expenses for treatments for rare diseases and conditions, according to a summary of the provision. The GOP bill would eliminate that credit for “certain drugs for rare diseases or conditions,” raising $54 billion in revenue over the 10-year period starting in 2018, according to the summary.
The rare disease provision was released as part of a broader tax overhaul proposal that would cut the U.S. tax rate on corporations from a 35% rate to 20%.
Congress has created a number of incentives for companies to discover and develop new treatments for rare diseases, including the tax credits as well as extended periods of sales exclusivity. They’re meant to prod the industry into developing medicine for rare disorders, which can affect only a few thousand people and otherwise might be ignored.
Under U.S. law, an orphan drug is defined as one that treats a disease affecting fewer than 200,000 Americans at a given time, including conditions like cystic fibrosis and Lou Gehrig’s disease.
In recent years, prices for some rare treatments have skyrocketed as drugmakers have seen them as an opportunity where patients have few other options, and health insurers and government are willing to pay.
By Zachary Tracer