House Approves Tax Bill that Ends Orphan-Drug Credit

A sweeping tax overhaul bill approved by the House in a 227-205 vote Thursday would eliminate the orphan-drug tax credit, although the version of the legislation up for Senate consideration wouldn’t go that far.

The orphan drug provision in current law allows drug manufacturers to claim a credit equal to 50 percent of the costs of any human clinical testing conducted in the development of a drug for a rare disease, defined by the FD&C Act as a condition affecting fewer than 200,000 people in the U.S.

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.