30 million Americans have a rare disease — don’t repeal their tax credits

Last November, Congress returned from its Thanksgiving holiday to pass the 21st Century Cures Act, which was signed into law by President Obama before the new year. This bill is one of the most impactful pieces of legislation for the rare disease community enacted by Congress in over a decade. It expanded incentives for developing therapies for kids with rare diseases, streamlined the FDA process for reviewing orphan therapies, and strengthened the patient voice at the FDA.

This year could not be more different.

{mosads}Instead of celebrating a monumental legislative achievement, rare disease patients are fighting for one of the most important incentives for developing therapies for our population: The Orphan Drug Tax Credit (ODTC).

Two weeks ago, the House passed their version of the Tax Cuts and Jobs Act, which includes a full repeal of the Orphan Drug Tax Credit. Later that same day, the Senate Finance Committee passed their version of the legislation. While the credit is not repealed, its value is cut nearly in half.

More than 30 million Americans have a rare disease, which is defined as a disease affecting 200,000 individuals or fewer. Only 5 percent of those millions of Americans have an FDA approved treatment. With 95 percent of people with a rare disease still waiting for a treatment, it is indefensible to consider weakening a tax credit that encourages the development of new and innovative orphan drugs.

The ODTC was originally created in 1983 as a part of the Orphan Drug Act (ODA), and is a major incentive for the development of drugs for patients with rare diseases, also known as orphan drugs. This incentive allows drug manufacturers to claim a tax credit of 50 percent of most of the costs of clinical research and drug testing, which is often more arduous for orphan drug development due to the complex science and smaller patient populations. 

In the decade before the ODTC was created, only 10 medicines were developed by private industry for rare diseases. Since its creation, more than 3,500 potential treatments have received orphan drug designation, and more than 500 orphan therapies have been approved by the Food and Drug Administration (FDA). This is a direct result of the incentives provided by the ODA, including the ODTC.

Without the ODTC, approximately one-third fewer orphan therapies will be developed going forward. This would be a stunning blow to everyone who has a rare disease — nearly one-tenth of the population — as well as those who love and care for them. They are the true beneficiaries of the ODTC.

We are in the midst of unprecedented advances in understanding diseases and finding treatments. One of every three new drugs approved by FDA in recent years has been for a rare disease, and we expect the same will hold true for 2017 should the ODTC be preserved. Repealing a tax credit that has been a major factor in incentivizing these advances would indeed be foolish.

This is why more than 200 nonpartisan patient groups sent a letter to Congress urging policymakers to not repeal the Orphan Drug Tax Credit in the Tax Cuts and Jobs Act. Since then 36 patient organizations implored the Senate to oppose the weakening of the credit, and 91 patient organizations condemned the House vote to repeal the credit.

Combined, these patient advocacy organizations represent tens of millions of Americans. These are the very same organizations that united together to successfully enact the 21st Century Cures Act just last year.

Congress listened to us last year, and we implore them to listen to us again. Please do not turn back the clock and remove one of the most important incentives for developing therapies for our community.

Please do not repeal, or substantially weaken, the Orphan Drug Tax Credit.

Peter L. Saltonstall is President and CEO of the National Organization for Rare Disorders.