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Tax code overhaul prioritizes government savings over saving lives

This past week, as more than 250 families walked the halls of Congress sharing their personal stories and advocating for policies that protect patients and bolster innovation for therapies that treat rare diseases (conditions affecting 200,000 people or less), they received a surprising message that irreparable harm may be caused to their efforts.

Buried within the draft tax reform proposal released last Wednesday by House Ways & Means Committee leadership is a proposal to eliminate incentives for drug manufacturers to develop therapies to treat and cure the more than 7,000 rare diseases afflicting more than 30 million Americans.

In a bipartisan effort to facilitate the development and commercialization of treatments for rare diseases, Congress passed the Orphan Drug Act in 1983. The law created the Orphan Drug Tax Credit, to provide incentives for drug companies to develop products for rare diseases.  Specifically, this program allows drug manufacturers to claim a tax credit of 50 percent of the qualified costs of clinical research and drug testing of orphan drugs.

This legislation has been extremely successful in spurring biomedical innovation for rare conditions – in the decade before the Orphan Drug Act, only 10 medicines were developed for rare diseases; since enactment of the Act a little more than 30 years ago, the U.S. Food and Drug Administration (FDA) has approved 360 rare disease treatments and more than 2,700 potential treatments have entered the research pipeline. 

More recently, following nearly two years of work between the pharmaceutical and biotechnology industries, the FDA, Congress, patient groups and other stakeholders, Congress enacted the FDA Safety and Innovation Act of 2012 (FDASIA). A bright spot in an otherwise gridlocked partisan environment, the legislation renewed FDA’s authority to collect “user fees” from manufacturers in order to bolster the Agency’s drug review activities, and also initiated several important reforms, including the Patient-Focused Drug Development Initiative to improve collaboration between the FDA and patient groups, and established a new “breakthrough therapy” designation intended to accelerate drug development for serious or life-threatening illnesses.

Despite considerable progress, more than 95 percent of rare diseases – approximately 6,800 conditions and disorders – have not one single FDA-approved treatment.

The Congressional Joint Committee on Taxation estimates that repealing the Orphan Drug Tax Credit will save the government $9.1 billion over the next 10 years – but the true cost of ending the program will come in the form of lost hope, continued suffering, and countless lives lost when needed new medicines are not developed.

Last week more than 70 countries recognized World Rare Disease Day and celebrated the many advancements in rare disease treatments over the past 3 decades, but also acknowledged that much, much more needs to be done. Congress must unite – as it has done before – in support of the approximately 1 in 10 Americans battling a rare disease. These efforts must include protecting the Orphan Drug Tax Credit so that it can continue to spur and support biomedical innovation into life-saving treatments and cures for patients that desperately need them.

Carey is director of federal government relations and alliance development at California Healthcare Institute (CHI). Jenkins is executive director of the EveryLife Foundation for Rare Diseases, dedicated to accelerating biotech innovation for rare disease treatments through science-driven public policy.


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