A rally by the National Organization for Rare Disorders and advocacy campaigns by the Polycystic Kidney Disease Foundation and others have been aimed at convincing Congress to restore a tax credit for pharmaceutical companies that develop drugs for rare diseases.

Congress passed the Orphan Drug Act in 1983, which offers tax incentives and 7 years of exclusive rights to drug companies to help people with rare diseases. The main requirement is that the orphan drug helps fewer than 200,000 patients in the United States.

However, the tax credit has been eliminated in the U.S. House of Representatives version of the proposed Tax Cuts and Jobs Act. The U.S. Senate also eliminated the credit in its version, but the Senate Finance Committee agreed to restore it after hearing from patient advocacy groups. The credit, however, is reduced to 27.5% — just more than half of the 50% offered to drug companies now under the Orphan Drug Act. A credit for manufacturers that repurpose an older, mass-market drug as an orphan drug — a practice criticized by those who want to see the credit eliminated — was also placed back into the Senate version of the tax bill.

“It’s one of the most important incentives for the biotech and pharmaceutical industry to develop treatments for orphan diseases,” according to an emailed message sent by the PKD Foundation last week to members and supporters. “Without the [orphan drug tax credit] ODTC, 33% fewer treatments would be developed going forward and countless lives could be affected or even lost.”

Autosomal dominant PKD, identified by the growth of numerous fluid-filled cysts in the kidneys, is the most common form of the disease. It causes about 5% of all kidney failure.

Some legislators say drug companies have abused the special credit to build profits. The Government Accountability Office confirmed in March that it would launch an investigation early next year of the orphan drug program after Senators Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.), raised concerns in a letter to the agency that the credit was being abused.

Congress is expected to vote on a final tax bill by the end of December. – by Mark E. Neumann


GAO To Launch Investigation Of FDA’s Orphan Drug Program