House Tax Reform Bill Axes Orphan Drug Research Tax Credit

House Republicans’ $1.51 trillion tax reform bill released Thursday would repeal the orphan drug tax credit, which currently allows drug manufacturers to claim a credit equal to 50 percent of the costs of any human clinical testing done for a product in a rare disease, as defined by the FD&C Act.

The congressional Joint Committee on Taxation estimates the removal of the credit, effective Jan. 1, 2018, would increase tax revenues by $54 billion over 10 years.

A 2015 white paper from BIO and the National Organization for Rare Diseases estimated that, without the credit’s lowering of development costs over the past 30 years, the number of orphan drugs produced in the U.S. would have dropped by one-third — representing at least 67 fewer products currently on the market.