House Republicans Aim To Eliminate Tax Credits For Orphan Drugs

As a part of a sweeping tax overhaul invoice, House Republicans on Thursday proposed eliminating billions of in company tax credit which have performed a key function within the booming trade to develop medication for uncommon illnesses.

For greater than three a long time, pharmaceutical firms have claimed a 50 p.c tax credit score for the price of scientific trials of orphan medication, medicines meant to deal with illnesses affecting fewer than 200,000 folks.

Sales of orphan medication hit $36.1 billion final 12 months, in response to a report launched final month by QuintilesIMS and the National Organization for Rare Disorders. And, in response to EvaluatePharma’s 2017 Orphan Drug Report, orphan medication will account for almost 22 p.c of world prescription gross sales, excluding generics, by 2022

Companies whose medication are deemed orphans by the Food and Drug Administration get a package deal of economic incentives, together with tax credit and 7 years of market exclusivity.

The credit have been authorized as a part of the 1983 Orphan Drug Act, which has been beneath scrutiny previously 12 months because the nation grapples with skyrocketing drug costs. Orphan medication routinely carry five-digit worth tags and have turn out to be a profitable marketplace for pharmaceutical firms.

In 2018, the U.S. is predicted to grant almost $2.eight billion in orphan drug tax credit to firms, in response to estimates from the Treasury Department. And the diminished tax income for the U.S. authorities beneath the present regulation would enhance yearly, to a projected complete of $75 billion from 2018 to 2027.

As gross sales rise, so does the price of the orphan drug tax credit to the U.S. authorities. “A billion here and a billion there and eventually it’s real money,” stated Nicholas Bagley, a regulation professor on the University of Michigan who has studied the credit.

The National Organization for Rare Disorders stated in a press release that there can be 33 p.c fewer orphan medication coming to market if the tax credit score vanishes, calling it “an unprecedented decrease in the development of these life-improving therapies.” NORD stated advocates for folks with uncommon illnesses had despatched over 500 letters to Congress in badist of the credit score.

The Biotechnology Innovation Organization, a commerce group, and 20 particular person drug firms, together with Novo Nordisk, Horizon and Sanofi, wrote to Congress late final month urging legislators to maintain the credit score within the tax overhaul invoice. BIO vowed Thursday to work with lawmakers to avoid wasting the credit score.

Yet James Love of the suppose tank Knowledge Ecology International welcomed the potential repeal as a solution to start a dialog about “deeper reform” within the monetary incentives for uncommon illnesses. He stated that most cancers medication and “huge blockbuster drugs [have] qualified for orphan tax credit[s] … and certainly provided no relief from high prices.”

Earlier this 12 months, former Rep. Henry Waxman, one of many Orphan Drug Act’s creators and champions, co-wrote a report on excessive drug costs for the Commonwealth Fund that instructed proscribing or changing the tax credit score. The authors of the report stated they do not take a place on the Republican tax invoice.

A Kaiser Health News investigation in January, which was revealed and aired by NPR, discovered that many medication that now have orphan standing aren’t solely new. Of about 450 medication which have gained orphan approval since 1983, greater than 70 have been medication first authorized by the Food and Drug Administration for mbad-market use. These medicines embrace ldl cholesterol blockbuster Crestor, Abilify for psychiatric issues and rheumatoid arthritis drug Humira, one of many world’s best-selling medication.

In March, the Government Accountability Office confirmed it might examine potential abuses of the Orphan Drug Act after receiving a letter from Sens. Orrin Hatch, R-Utah, Chuck Grbadley, R-Iowa, and Tom Cotton, R-Ark., that requested if the regulation wanted to be modified.

This summer season, the FDA introduced a plan to overtake the way it handles orphan medication and promised to eradicate a backlog in functions for medication’ uncommon illness standing. In a September replace, FDA Commissioner Scott Gottlieb wrote he needs to make sure monetary incentives are granted “in a way that’s consistent with the manner Congress intended” when it handed the regulation a long time in the past.


KHN’s protection of prescription drug growth, prices and pricing is supported partly by the Laura and John Arnold Foundation.

Copyright NPR 2017.


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