WASHINGTON _ A tax credit for the development andmanufacture of drugs given orphan drug status by theFDA has been revived and given permanent status,according to legislation introduced on July 20. The taxcredit, enacted in 1983, expired last year.

Sponsored by Sens. Orrin Hatch (R-Utah) and MaxBaucus (D-Mont.), both members of the Senate FinanceCommittee, the bill (S. 1052), would return 50 cents forevery dollar manufacturers spend on developing orphandrugs.

Similar legislation (HR 1566) has been introduced in theHouse by Reps. Nancy Johnson (R-Conn.) and RobertMatsui (D-Calif.). Neither bill will move forward throughthe legislative process until Congress finishes work onbudget reconciliation plans, which are still snarled in apartisan disagreement.

The same four sponsors have also introduced legislationthat would make the research and development tax creditpermanent.

"The two should be passed together," said ChuckLudlam, vice president of government relations,Biotechnology Industry Organization (BIO). Both billsare among BIO's top legislative priorities this year.

Hatch said the orphan drug tax credit legislation isnecessary to provide incentives to drug makers to investin treatment for persons with rare diseases. "Withoutsome incentive, there is simply no possibility of a firm toprofit from its decision to develop drugs that treat thesediseases," Hatch stated.

Over 100 orphan drugs have been approved by the FDAsince the program started more than a decade ago. Hatchestimates that over 600 are now in development.

Small entrepreneurial biotech firms, many of which arelocated in Utah, would benefit by allowing them to carrythe tax credit back three years and forward 15 years,"giving small, growing firms an impetus to find ways totreat rate diseases . . ." said Hatch.

"For many companies, the orphan drug tax credit is morevaluable that the R & D tax credit. While the R & D taxcredit generates only 25 cents for each dollar expended bya manufacturer, the orphan drug tax credit is 50 cents onthe dollar to promote clinical research. The carry-forwardfeature of the orphan drug bill is quite important becauseso many of our firms currently do not have a taxliability," Ludlam told BioWorld Today. n

-- Michele L. Robinson Washington Editor

(c) 1997 American Health Consultants. All rights reserved.