Cutting the Orphan Drug Tax Credit is Not Drug Pricing Reform

By: Betsy Ricketts, Chair of the Rare Disease Company Coalition, and Vice President of Policy, Government and Public Affairs at Ultragenyx, a company member of the Rare Disease Company Coalition

Originally Published at (December 29, 2021)

Congress’s proposed limits to the Orphan Drug Tax Credit (ODTC) in the Build Back Better Act (H.R. 5376) could severely hurt development of potential treatments for rare diseases that impact 30 million people in the United States, half of whom are children. It is difficult to understand how Congress could agree to the drastic reduction of this proven resource that supports the development of new treatments for 90 percent of the approximately 7,000 known rare diseases that currently do not have an FDA-approved treatment, many of which are life-limiting or fatal. 

To understand the significance of the ODTC, it is important to understand the unique challenges — and promises — in taking rare disease drugs from research through development, approval, manufacturing and delivery to patients. Rare diseases have small patient populations, which makes developing drugs to treat them inherently more difficult, costly, and risky than those for common medical conditions. The ODTC incentivizes biotechnology and pharmaceutical companies to invest in the development of treatments that are not otherwise economically viable. 

In 1983, recognizing rare diseases historically have attracted minimal attention, Congress established the Orphan Drug Act (ODA), creating the tax credit for advancement of rare disease treatments. At the time, only 38 drugs had been approved by the U.S. Food and Drug Administration (FDA) for rare diseases. Now, thanks to this effective and long-standing public health policy, there are more than 650 drugs approved to treat rare diseases. Most importantly, this has led to a significant and consistent decline in the number of annual deaths from rare diseases. 

Congress should not be focused on snatching hope from those living with rare diseases; our representatives should instead support and enhance existing rare disease policy because it is working. Of note, the FDA affirmed the value of the ODA and this incentive in an Office of Inspector General (OIG) report issued in September. Rep. Anna Eshoo (D-Calif.) also recently called for the complete restoration of the ODTC after it was reduced from 50 to 25 percent in 2017. 

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