House Cuts Orphan Drug Credit in Half as Part of Tax Reform Bill

The House of Representatives passed the final version of the Republicans’ tax reform legislation Wednesday, a sweeping $1.5 trillion measure that reduces or eliminates many deductions and credits — including cutting the orphan drug research tax credit in half.

Previously, drugmakers were allowed to claim 50 percent of clinical testing-related expenses for research in rare diseases — now, they will only be allowed 25 percent.

Previous versions of the reform package would have shrunk the size of the credit or eliminated it completely. Preliminary assessments estimated the final change will end up costing the industry $10 billion over the next five years, and up to $32.5 billion total through 2027.