As Congress begins debate this week to overhaul the U.S. tax code, lawmakers should leave the Orphan Drug Act (ODA) — and the tax incentives it offers pharmaceutical companies to develop therapies for rare diseases — off the table.
That’s the message being pushed by the National Organization for Rare Disorders (NORD). The nonprofit group commissioned a study, released Oct. 17, by the QuintilesIMS Institute to bolster support for the Orphan Drug Act among U.S. lawmakers — and to counter charges that pharmaceutical companies manipulate the incentives offered by the landmark act, signed into law by President Reagan in 1983.
The 32-page report, “Orphan Drugs in the United States: Providing Context for Use and Cost,” found that approved drugs for orphan indications accounted for only $36 billion, or 7.9 percent, of the $460 billion Americans spent on pharmaceuticals in 2016.
“As you all know, there’s been lots of noise in the marketplace about the Orphan Drug Act and its impact,” said Peter Saltonstall, NORD president and CEO, speaking Tuesday at his organization’s annual two-day Rare Diseases & Orphan Products Breakthrough Summit in Washington, D.C.
“We, as the patient organization that essentially birthed the Orphan Drug Act 35 years ago, thought it was important to lay out the case factually,” Saltonstall told about 670 summit participants. “We realize that orphan drugs are very emotional, but we want to take the emotion out of the conversation and build our case around facts.”
One key fact, according to the report, is that although the median annual cost for an orphan drug in 2016 was $32,880, the top 10 therapies used by most patients averaged $14,909.
The Orphan Drug Tax Credit (ODTC) allows sponsors with orphan designation to collect tax credits for expenses incurred running clinical trials of potential therapies for the indicated rare, or orphan, disease. This tax credit lowers the cost of drug development; according to NORD, 33 percent fewer rare disease drugs would be developed without the credit.
A case in point is Kalydeco (ivacaftor) — a therapy approved for the symptomatic treatment of cystic fibrosis. Developed by Vertex Pharmaceuticals, the drug is effective in patients with the G551D mutation and R117-H-CTFR mutation, among others. It is the first therapy to address the underlying cause of CF rather than treating only its symptoms.
Before Kalydeco’s approval in 2012 by the U.S. Food and Drug Administration (FDA), only one other therapy for CF existed. Five years later, Kalydeco received FDA approval to treat 23 other CTFR mutations — bringing the total of CF-causing gene mutations this therapy can treat to 33.
“The Orphan Drug Act has been supporting orphan drug development for over three decades through tax credits for clinical research, waiver of user fees, and seven years of market exclusivity,” said Mike Lanthier, an operations research analyst at the FDA.