Major Setback for the Orphan Drug Act

Nerves were high last week as the Senate geared up to vote on the bill to overhaul the U.S. tax code. Members of the rare disease community felt particularly vulnerable, fearing the repeal of the Orphan Drug Act (ODA).

The Orphan Drug Act was signed into law in 1983. The Reagan-era legislation was created to aid people with rare diseases. One of the most important parts of the ODA is the Orphan Drug Tax Credit, which incentivizes research into treatments for rare diseases– an expensive endeavor that pharmaceutical companies might not otherwise have the financial resources for. Since an individual rare disease only affects a relatively small number of people, their treatments aren’t usually as profitable as a treatment for a more common disease. The ODA counteracts this, demonstrating the belief that a person suffering from a rare disease deserves treatment just as much as a person suffering from a common one.

It’s commonly estimated that about one in three rare disease treatments would not have been developed without the ODA. However, critics argue that the ODA lets pharmaceutical companies exploit the incentives and overcharge for drugs. Although there are legitimate concerns to resolve, addressing them by simply repealing the ODA altogether puts the rare disease community at risk.

In mid-November, the House of Representatives voted to overhaul the U.S. tax code, which affects many different issues, such as education, healthcare, and environmental policy. The House voted to repeal the ODA entirely, which devastated caregivers, patients, researchers, and friends of the rare disease community. However, before the changes could become law, the tax bill also had to pass in the Senate.

Right around 2 A.M. on Saturday, December 2nd, in an agonizingly close 51-49 decision, the Senate voted to pass a version of tax bill. The circumstances around this vote are contentious: the senators were given a revised copy of the nearly 500 page tax bill just hours before they voted, which meant the Senators were voting on something they literally could not have thoroughly read. There was a proposal to move the vote to Monday, so that senators and citizens could read and understand the changes, but this motion was struck down.

Although the tax bill was passed, there were some differences between the House and Senate versions of the overhaul– including a different decision on what action to take on the ODA.

To be clear, neither version of the tax bill benefits the Orphan Drug Act. Both versions involve serious ODA cuts, both may lead to less research into rare disease treatments. Still, the new Senate version isn’t as bad for the ODA. While the House voted to repeal the ODA entirely, the Senate voted to reform it by essentially cutting the tax credit in half.

The bill is not yet law; Congress will continue to deliberate to nail down the specifics. However, Republican lawmakers feel confident that it will be worked out soon.

Many things are still uncertain, but we know a few things right now. This weekend brought bad news for the ODA– Congress’s approval of the tax bill means major cuts to the ODA, and holds implications for the Affordable Care Act. Still, there’s some hope. The news isn’t quite as severe as what many people braced for, and the Senate voted to keep the ODA around, if in a diminished form.

Read more about the tax bill’s effects on health policy and the ODA in Kaiser Health News here.

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