What is the Orphan Drug Tax Credit?
The credit is available for testing expenses for drugs, vaccines, diagnostic drugs, or preventive drugs, used to treat rare diseases or conditions. A rare disease or condition is defined as one which: (A) affects less than 200,000 persons in the United States, or (B) affects more than 200,000 persons in the United States, but there is no reasonable expectation that the cost of developing and making available in the United States a drug for disease or condition will be recovered from sales in the United States of such drug. The credit is available for any indication that meets these criteria, even if the product itself is used for other indications that are not qualified. Thus, for example, BMS’s Taxol has qualified for use for AIDS-related Kaposi’s sarcoma, an indication that qualifies as a rare disease, while the largest market for Taxol is for breast cancer, a disease with a client population much greater than 200,000. The tax credit is normally for 50 percent of the costs of clinica
