IRS Proposed Regulations on Orphan Drug Exclusion from Drug Tax Stand to Harm Future Development of Treatments for Rare Disease Patients
ANNAPOLIS, MD - The Plasma Protein Therapeutics Association (PPTA) believes the 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.
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 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 U.S. Food and Drug Administration (FDA), which is required to quality for the Orphan Drug Act tax credit.
"By creating an exemption to the fee for orphan drugs, as well as the long history of incentives initiated with the enactment of the Orphan Drug Act, there is clearly a longstanding congressional interest in encouraging the research and development of drugs and biologicals to treat rare diseases; however, the rule implementing the orphan drug exclusion from the fee fails to equitably treat all rare disease therapies," said Julie Birkofer, senior vice president, North America, PPTA.
The sales of numerous drugs that are solely approved for marketing by the FDA for one or more rare disease or condition will be subject to the fee under the current regulations. "In its regulations, the IRS should only be considering the size of the patient population, not whether a manufacturer overcame complicated FDA regulations that govern claiming the Orphan Drug Act tax credit," Birkofer added.
"The IRS typically does not interface with patient groups and their regulations make it clear that there is a fundamental lack of appreciation at the Agency for patient access to treatments for rare diseases," Birkofer said. "This is unfortunate and avoidable."
Congress has legislation pending in both Chambers that would correct this problem. H.R. 2672 and S. 1423, the "Preserving Access to Orphan Drugs Act of 2011," is a budget neutral solution that would provide the legislative relief needed to protect incentives for producing therapies for rare disease patients. The bills aim to exempt the sales of all drugs and therapies that are solely approved by the FDA for marketing for one or more rare disease or condition from the annual pharmaceutical fee calculation.
Plasma protein therapies, which include plasma-derived therapies and recombinant blood clotting factors (a biotechnology product), are used every day to treat people with rare, chronic, often genetic diseases including hemophilia, a blood clotting disorder that causes painful internal bleeding and debilitating joint damage; primary immunodeficiency diseases, which prevent a person from fighting off even common infections; alpha-1 antitrypsin deficiency, also known as genetic chronic obstructive pulmonary disease (COPD), a disease that affects the liver and lungs; idiopathic thrombocytopenic purpura (ITP), a bleeding disorder in which the immune system destroys platelets; and chronic inflammatory demyelinating polyneuropathy (CIDP), a disease of the peripheral nervous system that causes paralysis. In addition, the plasma protein therapy albumin is used in critical care settings, when treating severe trauma, burns and during major surgery.
Plasma protein therapies are unique biological products for which no generics or substitutions exist. Further, plasma protein therapies are not "me-too" products. Each brand within a therapeutic class is distinct, and not all therapies within a class are approved by FDA for the same rare disease indication; however, with the exception of albumin and fibrin sealant, all brands of plasma protein therapies are solely indicated to treat one or more rare disease or condition. The complex production of these large molecule biologics, many of which rely on the expensive and highly regulated collection of human plasma as the starting material and that require significant investment in the production process for each therapy each time it is produced, cannot be overstated.
Please read PPTA's comment letter to the IRS.
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