Urge Congress to Protect the Orphan Drug Tax Credit

The Orphan Drug Tax Credit is critical to continued innovation in rare disease drug development. Recent proposals considered by Congress threaten to limit the applicability of the incentive, which was previously halved in 2017. Please help us protect the Orphan Drug Tax Credit. To send a letter to your Senators and Representative, review the message below and click "send message" on the right. Thank you!

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I write to you today to urge you to protect the Orphan Drug Tax Credit (ODTC) and reject any changes that would negatively impact the development of rare disease treatments and cures. The ODTC is a critical incentive in the Orphan Drug Act and has spurred innovation for rare disease patients for almost four decades.

Congress passed the Orphan Drug Act of 1983 to incentivize the development of orphan drugs for rare diseases, or diseases that affect fewer than 200,000 Americans. Prior to 1983, there were fewer than 30 drugs for rare diseases, as developing orphan drugs is very complex and costly, due to the small sizes of those patient populations. The law established a seven-year period of market exclusivity for products approved to treat orphan diseases and created the ODTC for up to 50 percent of qualified clinical testing expenses. The Orphan Drug Act has been extremely successful at creating an ecosystem for developing orphan drugs, and almost 40 years after the enactment of this landmark law, patients have access to more than 650 drugs for over 1,000 rare diseases.

The progress made to date has been transformative for the rare disease community, but many patients still lack an approved treatment. More than 7,000 rare diseases affect 30 million Americans and over 90 percent of rare diseases still lack an FDA-approved treatment. The challenges of developing drugs for rare diseases still exist, and conducting clinical trials remains complex because the patient populations for rare diseases are small and geographically disparate.

Congress has already taken action to limit the ODTC when it passed the Tax Cuts and Jobs Act of 2017, which cut the ODTC in half. Taking any further action to weaken the ODTC, including limiting or eliminating the availability of the credit for further orphan indications, would have disastrous consequences for rare disease patients and could arbitrarily disfavor one patient group over another. All rare disease patients deserve equal incentives for their condition to be researched.

Adding additional orphan indications to a drug's label requires significant investment on behalf of the sponsor, including conducting further clinical trials with new populations. Limiting the availability of the ODTC will disproportionally affect small and medium-sized companies with limited resources that may elect not to conduct research into a drug's utility to treat additional rare diseases if they believe it to be too risky and costly. According to the Congressional Budget Office (CBO), about one-third of the new drugs approved by the Food and Drug Administration since 2009 have been developed by small companies. Without the ODTC, hundreds of patient communities would not have access to a treatment.

Additionally, a reduction in incentives for clinical research will deprive patients of access to clinical trials, which could have otherwise provided tremendous benefits to patients. In the long term, any adverse change to the ODTC will undermine the research and development of future orphan products and ultimately harm patients.

We urge you to ensure innovators continue to have the incentives to conduct complex clinical research for rare diseases and refrain from further weakening the ODTC.