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Tax Credit End Considered

Lawmakers in the US Congress are considering getting rid of a tax break that was put in place to encourage the development of drugs for orphan diseases, the New York Times reports.

The credit stems from the 1983 Orphan Drug Act, which gives companies an incentive to develop drugs for rare diseases that affect fewer than 200,000 people by giving them a tax credit for half of what they spend on clinical trials. The law also protects the companies from competition for seven years. According to the Times, ending the tax credit would save $54 billion over the next decade.

It adds that proponents of the credit say it has led to the development and approval of about 500 new drugs for rare diseases, while critics say it has been exploited and been used for blockbuster drugs. Trade group NORD estimates that ending the credit would lead to the development of fewer drugs.

The Times notes that even if the proposal is included in the House of Representative tax bill, it would likely face resistance in the Senate, especially from Senator Orrin Hatch (R-Utah), who was a sponsor of the bill and is overseeing the tax reform effort.