WASHINGTON (Gray DC) - Tax reform could leave a federal incentive for rare drug development on life support.
Charlene York made the trip from Ohio to Washington – in hopes of convincing lawmakers that saving families like hers may hinge on saving a tax credit for drug companies. “If it goes away, it’s going to be like a kick in the gut,” she said.
York’s husband and daughter suffer from a rare form of muscular dystrophy. The genetic disorder progresses from birth, and can affect breathing and mental function.
“It is so hard to see your husband going down, down, down,” she said, “and you’re waiting for your daughter to go down, down, down.”
Companies that research drugs for rare diseases get a big tax break now. The idea is to make it financially worthwhile for drug companies to do research the market may not demand.
The House recently voted to cut it – and the Senate is considering scaling it back.
Development of a host of rare disease treatments could be slowed by tax reform according to experts, but prices for treatments that are available are not expected to rise.
Sen. Orrin Hatch (R-Utah) helped write the tax break into law more than 30 years ago. But in committee this week, he voted in favor of a tax package that would reduce the benefit.
In a statement, a spokesperson for the finance committee he leads wrote:
“Chairman Hatch has been a strong advocate of this initiative, which is why his tax bill does not repeal the orphan drug tax credit, but rather makes modifications to it. However, as with any major reform, tough choices have to be made. As Congress continues to debate the Senate’s tax reform plan, the chairman will work with his colleagues to make the appropriate policy decisions to help deliver a comprehensive tax overhaul that will grow the economy, boost job creation, and increase paychecks for the American people.”
Jamie Love – the director of Knowledge Ecology International -- said the credit is flawed. “What you see with the tax bill though is kind of ham-fisted,” he said.
He said the tax credit reform should be reformed but not as part of the broader tax debate.
Love’s first suggested tweak: the public should know which companies that receive a tax break. That’s an idea that is in the Senate’s plan, but not the House’s.
Love said that companies benefitting from the credit should also be required to make it affordable in exchange for the Government’s investment. Some rare disease drugs carry million-dollar-plus price-tags for a year’s supply.
Finally, Love said when a company has a top-selling drug for a common disease – like Humira – it’s makers shouldn’t qualify for a tax benefit when researching whether it will benefit those with a rare disorder. He said that’s one of a couple ways the credit has been abused,
it’s just become people feeding at the trough.”
Spokespeople for the National Organization for Rare Disease said they’re open to tweaks. But, they argue it does make sense for already profitable drugs to receive a benefit, because it could be the difference between whether alternate uses are tested at all.
The Senate is expected to vote on the whole reform package this week.