So far, in discussing the financial incentives that the Orphan Drug Act creates for drug manufacturers, I’ve focused exclusively on the seven-year exclusivity period. But the Act also offers tax credits equal to half the amount that drug manufacturers spend on developing orphan drugs.
Because so many orphan drugs are under development, this is a huge tax break for drug manufacturers—$1.75 billion in forgone tax revenue in 2016 alone. By 2020, that figure will rise to a whopping $3.7 billion.
To put that in perspective, the federal government spent just $340 million in 2014 to support research into new antibiotics. We will spend five times as much in 2016 to develop drugs for rare diseases, even as more than 23,000 Americans die each year from antibiotic-resistant infections.
Is this really the best way to target our scarce research dollars?