4:19 PM
 | 
Nov 03, 2017
 |  BioCentury  |  Politics, Policy & Law

Taxing times

The Republican tax bill has a lot pharma likes, but industry will fight elimination of the Orphan credit

Biopharma industry lobbyists responding to the House Republican tax reform bill released Nov. 2 are working to ensure that the baby isn’t thrown out with the bathwater. They strongly support prominent parts of the Tax Cuts and Jobs Act (H.R. 1), including lowering of the corporate tax rate, incentives to repatriate profits and preserving the R&D tax credit, but will try to reverse its elimination of the Orphan Drug tax credit, and to shelter companies with global supply chains from a proposed excise tax on payments from U.S. corporations to foreign affiliates.

BIO and the National Organization for Rare Disorders (NORD) anticipated that the Orphan tax credit could be a target. They have been lobbying for months to prevent it from being swept up in efforts to pay for tax cuts under H.R. 1 that would amount to $2.5 trillion over 10 years before any offsets.

Elimination of the credit, which covers 50% of pre-approval clinical development expenses for drugs that have Orphan Drug designation, would reduce the number of new Orphan drugs approved by 33%, according to an analysis conducted by Ernst & Young that was sponsored by BIO and NORD.

“The Orphan Drug Tax Credit is one of the most important incentives for developing therapies for individuals with rare diseases, and its repeal is wholly unacceptable,” NORD said in a statement.

BIO issued a more measured statement, praising aspects of the bill and saying it “look[s] forward to working with lawmakers to ensure that our nation’s tax code most effectively encourages innovation, investment and American entrepreneurship,” including by “maintaining the Orphan Drug Tax Credit.”

“It will force companies to look at their supply chains and potentially change their operations.”

Kathy Michael, PricewaterhouseCoopers

 

The credit could be...

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