2:49 PM
Jan 10, 2018
 |  BioCentury  |  Politics, Policy & Law

Not so bad

Why halving the Orphan Drug Tax credit won’t have much impact on investment

The decision by Congress to cut the Orphan Drug tax credit in half in the tax reform law is unlikely to substantially reduce investment in medicines for rare diseases, according to drug developers and public policy scholars. The reason is that other more powerful incentives remain in place, and cost-containment efforts have not yet diminished pricing power for Orphan drugs in the U.S.

The cut actually represents a victory of sorts for Orphan Drug developers. After the House of Representatives passed a tax reform bill that completely eliminated the credit in December, industry and rare disease advocates lobbied to get the credit restored. The version that passed the Senate cut the credit to 27.5% from 50%. The final Tax Cuts and Jobs Act trimmed this to 25%.

Congress did not make any other changes to the Orphan Drug Tax Act; Orphan designation continues to confer seven years of market exclusivity and a waiver for FDA user fees.

Members of Congress took aim...

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