As part of a sweeping tax reform bill, House Republicans on November 2, 2017 proposed eliminating billions of dollars in corporate tax credits that have played a key role in the burgeoning “orphan drug” industry. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay The credits were approved as part of the Orphan Drug Act (ODA) of 1983. Under current policy, pharmaceutical and biotechnology companies are allowed a tax credit of up to 50% of certain research costs for drugs for rare diseases. The new tax bill, if passed, would repeal the credit “for certain drugs, rare diseases or conditions” starting this year. The bill's attempt to repeal the Orphan Drug Research Credit follows the recent release of an analysis by the U.S. Department of the Treasury that found that total tax expenditures from the Orphan Drug Research Credit are on the rise. Spending is expected to increase from about $2.3 billion in 2017 to nearly $6 billion in 2022 to more than $15 billion in 2027. Under the bill, the elimination of tax credits for Orphan drugs would save $54 billion in revenue over the next decade. The National Organization for Rare Disorders (NORD) stated that “if the credit vanished, there would be 33% fewer orphan drugs coming to market” (drawing the findings from a 2015 report). In the United States there are approximately 7,000 rare diseases that affect 25 to 30 million people. Children make up more than half of those affected.3 An orphan drug is a pharmaceutical product intended for the treatment of rare diseases or disorders. To obtain orphan drug designation, a product must be intended to treat a disease that affects fewer than 200,000 people in the United States. The development of orphan drugs was financially incentivized by US law through the Orphan Drug Act of 1983. Through this act, Congress sought to incentivize the development of drugs to treat rare diseases by offering pharmaceutical manufacturers tax credits, fee exemptions and a seven-year period of marketing exclusivity for an approved orphan indication. In terms of the tax credit, a sponsor can claim half of the qualified clinical research costs (50%) for a designated orphan product. The orphan drug credit is available for qualifying costs incurred between the date the Food and Drug Administration (FDA) designates a drug as an orphan drug and the date the FDA approves the drug, although the research credit may be required for development costs that are qualified research expenses regardless of FDA designation or approval of the drug. Before the Orphan Drug Act went into effect in 1983, drug developers were often reluctant to invest in developing new treatments for rare diseases because small patient populations made it difficult to recoup development costs. For rare diseases, clinical trial costs alone can amount to thousands of dollars per person diagnosed with the disease. Since 1983, the FDA has granted more than 3,500 orphan designations and approved more than 500 orphan drugs.3 A combination of market and regulatory barriers has limited drug developers' ability to bring new orphan drugs to market, and while many of these barriers remain in place today, the APS has significantly reduced them.