NORD Statement on Proposed Changes to the Orphan Drug Tax Credit

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The National Organization for Rare Disorders (NORD), the leading independent nonprofit organization representing the more than 25 million Americans with rare diseases, issued the following statement in response to upcoming congressional consideration of the Build Back Better Act in the House Committee on Ways and Means:

Peter Saltonstall, CEO and President of NORD, stated: “This week, the Ways and Means Committee will consider the Build Back Better Act, which would amend the Orphan Drug Tax Credit (ODTC) in ways that would severely undercut the original goal of the 1983 Orphan Drug Act. NORD is deeply concerned about this misguided provision, and we urge the Committee to oppose its inclusion in this legislative package.”

Section 138141 of the Build Back Better Act would dramatically curtail the Orphan Drug Tax Credit for qualified clinical testing expenses by removing this critical incentive for all but the first approved orphan use of a new drug. Over 90% of rare diseases lack an FDA-approved treatment indicated for the specific rare disease. Each time a new orphan use of a drug is added to the label of a drug, more rare disease patients receive assurance that the drug is safe and effective for them. The importance of FDA approval for rare disease patients cannot be understated.

The ODTC can help to offset the cost of developing and testing orphan therapies as they move through the clinical trial process. This longstanding incentive is particularly important for the many smaller companies focused exclusively on rare diseases.

NORD shares the concern  about the high cost of drugs  and has issued drug pricing principles to underscore our commitment to addressing it. As lawmakers consider this provision targeted directly at rare disease drugs , it is critical to note that orphan drugs account for only 11% of the overall drug spend in the United States, according to an IQVIA report commissioned by NORD. In its efforts to alleviate the burden on US patients at the pharmacy counter, Congress should focus on the true drivers of high drug costs, and not attack the critical incentives necessary for developing products for those who need them the most and who were at one time entirely left out of the drug development process: rare disease patients.

The ODTC was already diminished in 2017 in the Tax Cut and Jobs Act when Congress reduced the total amount of the tax credit for qualifying clinical testing expenses from 50% to 25%. NORD opposed this change then and again calls on Congress to maintain the ODTC as it stands today, so that rare disease patients can maintain their hope that new orphan uses of drugs will continue to be pursued.