[Update: 12-19-2017: It appears that the ODA Tax credits will be cut in half, but will still exist in the final tax bill. It remains to be seen how this change will affect investment in therapies to treat small and rare cancer populations.]
Dear Cancer Patient Advocates:
The house tax bill removes tax incentives for drugs that are classified as Orphan Diseases under the 1983 Orphan Drugs Act. This is bad news for many cancer patients. These incentives have encouraged pharmaceutical companies to spend more resources developing and testing treatments for conditions with fewer than 200,000 patients in the U.S.
If you have cancer, you probably don’t think of yourself as having a rare disease. But you might. Many cancers have successfully qualified as Orphan Diseases. For instance, almost every new pancreatic cancer drug currently in Phase II clinical development has received Orphan Drug status. Here are a few other cancers that are benefiting from Orphan Drug tax incentives:
- Ovarian Cancers
- Triple Negative Breast Cancers
- Rare Endocrine Cancers
- Small Cell Lung Cancers
As we learn more about the molecular basis for cancer, there will undoubtedly be sub-types of breast cancer, NSCLC and other “common” cancers that will quality as Orphan diseases.
According to the National Organization for Rare Disorders (NORD), losing this tax credit will result in a third fewer drugs being created for rare disease.
What can you do? Help us rally the cancer community to fight alongside NORD and other rare disease organizations. Call your senators and say, “DO NOT TAKE AWAY Orphan Drug tax incentives.” Innovation is already too slow. We need cures faster, not slower.
CYTIMMUNE’S POSITION ON THE ORPHAN DRUG ACT
Orphan Drug Act Abuse (The Senate Plan)
There is no doubt that many companies have taken advantage of the Orphan Drug Act and tax incentives in ways that it was never intended. It needs to be reformed. CytImmune supports reforms to the Orphan Drug Act that limit benefits to Novel Medicines that treat populations of 200,000 or fewer. Senator Orin Hatch is proposing changes to the Senate version of the Republican Tax Bill that would do this. For more information, please read this article in Fast Company.
Big Pharma vs Biotechs, An Important Distinction for the Orphan Drug Tax Credit
So why should cancer patient advocates care? Here’s what I imagine you are thinking: Pharma companies charge patients ludicrously high prices for new medicines. This is all about their profits. If they want to keep their tax credits, let them spend their money lobbying congress. I totally agree…Except that isn’t how it really works.
First Big Pharma companies (Novartis, Amgen, Merck, etc) don’t really care where their profits come from. Bigger market drugs are more attractive to them. They won’t push back on the loss of Orphan Drug tax incentives because they stand to gain much more from the lower 20% tax rate that Republicans are proposing.
Second, Big Pharma does not invent most new medicines. Small biotech companies do.
Most small biotech companies are pre-IPO, early stage clinical companies. Most have only a handful of employees, operate month to month on a shoestring budget, get their funding from wealthy friends and family, and sometimes local governments (looking at you Boston). Pharma companies and venture capitalists fund small biotechs only AFTER they show a high likelihood of success.
This is where the Orphan Drug Act is important. Right now, pharma companies and venture capital organizations are willing to invest in many products that have potentially smaller markets because of the Orphan Drug Tax Credit. If that credit is taken away, it will lower the value of medicines that treat small populations. Again, Big Pharma’s first priority is to maximize investment. They will shift their investments toward bigger market drugs.
This will ripple through the pipeline, killing many small biotechs who are translating academic research into clinical products.
This will limit the number of new cancer drugs in the future.
It’s a crazy way of doing business, but it’s the reality right now. Big Pharma is going to make money for their shareholders. Venture capitalists are going to make money for their investors. The question for cancer patients is, do you want them making those profits treating the patients who matter most to you?