Orphan drug exclusion from US drug tax stand to harm innovation on rare diseases

The US Internal Revenue Services' issuance of temporary and proposed regulations implementing the annual pharmaceutical fee undermines patients with rare diseases and fails to take into account concerns expressed by leading consumer organizations and Congress, argues the Plasma Protein Therapeutics Association (PPTA).

The agency's narrow definition of an "orphan drug" disproportionally affects the highly specialized segment of biological plasma protein therapies and puts the development of drugs and therapies for rare diseases at risk, the PPTA claims.

The IRS regulations continue to require that a manufacturer claim the Orphan Drug Act tax credit established in section 45C of the Internal Revenue Code in order for a drug to qualify as an "orphan drug" for the purpose of excluding its sales from calculations that determine a manufacturer's total annual pharmaceutical fee liability. This stance acutely affects plasma protein therapies. The majority of these therapies face significant regulatory hurdles in obtaining "orphan designation" as a result of there being multiple unique, non-interchangeable brands in most therapeutic classes to meet the needs of a variety of rare disease patient populations. Typically, only the first to market drug or therapy in a class receives orphan drug designation from the US Food and Drug Administration, which is required to quality for the Orphan Drug Act tax credit.