[Congressional Record Volume 141, Number 72 (Wednesday, May 3, 1995)]
[Extensions of Remarks]
[Page E939]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                 THE IMPORTANCE OF ORPHAN DRUG RESEARCH

                                 ______


                         HON. NANCY L. JOHNSON

                             of connecticut

                    in the house of representatives

                         Wednesday, May 3, 1995
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I am pleased to introduce 
today, along with my distinguished senior colleague from the Ways and 
Means Committee, Robert Matsui, the Orphan Drug Tax Credit Amendments 
of 1995.
  In 1983, the Congress enacted legislation that granted a tax credit 
for the clinical testing of drugs used to treat rare diseases with 
limited commercial potential, commonly referred to as orphan drugs. 
This legislation, in conjunction with orphan drug market exclusivity, 
has been successful in encouraging the type of narrow research critical 
to finding answers to the many questions posed by rare diseases. 
Currently, there are approximately 600 drugs that have received orphan 
drug designation and more than 100 of those have been approved for 
marketing. Because of the orphan drug legislation, we now have drugs to 
treat such diseases as cystic fibrosis, hepatitis B, multiple 
sclerosis, renal cell carcinoma, and pituitary dwarfism.
  The bill we are introducing today would make two significant changes 
to the orphan drug tax credit:
  First, it would make the orphan drug tax credit, which expired at the 
end of last year, permanent. Uncertainty over the future of the tax 
credit has caused a significant decline in the investment of capital in 
the biotechnology industry.
  Second, this bill would allow companies to carry the tax credit back 
or forward pursuant to section 39 of the Internal Revenue Code. Most of 
the companies engaged in research of orphan drugs do not qualify for 
the tax credit. Under current law, a company can only claim a credit 
against their current year tax liability. Since most companies involved 
in orphan drug research are biotechnology firms that are still 
developing and have yet to market a product, they have no tax liability 
against which to claim the tax credit. This structural change would 
allow a developing company, such as a biotechnology firm, to use the 
tax credit at such time that it had a tax liability.
  I am pleased to note that this bill is endorsed by both the 
Biotechnology Industry Organization, which represents the biotechnology 
industry, and the National Organization for Rare Disorders, Inc. 
[NORD], the primary nonprofit organization representing patients with 
rare diseases.
  I commend this bill to my colleagues and look forward to its prompt 
approval by the Congress.


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