The Association Between the Orphan Drug Tax Credit Reduction and the Orphan Drug Pipeline Público

Abstract

Rare diseases have significant consequences for patients and caregivers in the United States. One of the original financial incentives in Orphan Drug Act (ODA) to encourage investments, the orphan drug tax credit, was reduced by the Tax Cuts and Jobs Act in 2017 from 50% to 25%. This study examines the orphan drug pipeline and quantify the tax credit reduction policy impact. After using a differences in differences method, the results suggest that the orphan drug tax credit reduction is negatively associated with the number of drug candidates in the pipeline, although this association was statistically nonsignificant. Based on the limited sample size and study period, the study yields conservative estimates. This study sets the foundation for future work to better understand the impact of orphan drug tax credits on the orphan drug development.

Table of Contents

Chapter 1 Introduction ...............................................................................................................1 Chapter 2 Literature review .......................................................................................................2

2.1 Overview of the Orphan Drug Act of 1983 (ODA).........................................................2 2.1.1 Research and Development (R&D) Cost..................................................................3 2.1.2 Orphan Drug Tax Credit (ODTC).............................................................................4

2.2 Overview of the Tax Cuts and Jobs Act (TCJA) in 2017 ................................................4 2.3 Overview of oncology drugs and rare cancers.................................................................6 2.4 The Evidence Gap & Current Study ................................................................................7

Chapter 3 Methodology .............................................................................................................9 3.1 Theoretical Framework ....................................................................................................9

Focal Relationship ...........................................................................................................10 3.2 Hypothesis......................................................................................................................11 3.3 Data Sources ..................................................................................................................12

3.4 Analytic Sample.............................................................................................................13 Analytic Sample Definition .............................................................................................13 Analytic Sample Derivation.............................................................................................14

3.5 Constructs ......................................................................................................................17 Competition(+,-) ..............................................................................................................17 Medical Advancement (+,+) ............................................................................................17 Business Tax Reduction(+,?) ...........................................................................................18 Funders ............................................................................................................................. 19 Phase ................................................................................................................................19

3.6 Statistical Analyses ........................................................................................................22 Chapter 4 Results .....................................................................................................................23 4.1 Descriptive Statistics......................................................................................................23 4.2 Descriptive Results ........................................................................................................26

4.3 Results of regression analyses .......................................................................................27 Overall Association between Policy Change and the Number of Orphan Drug Candidate..........................................................................................................................................29 Association between Policy Change and the Number of Orphan Drug Candidate in Subgroups ........................................................................................................................29

Chapter 5 Discussion ...............................................................................................................30 5.1 Key Findings ..............................................................................................................30 5.3 Policy Implications ....................................................................................................32 5.4 Strengths and Limitations ..........................................................................................33 5.5 Recommendations for Future Research .....................................................................34

Chapter 6 Conclusion...............................................................................................................35 References ................................................................................................................................ 36

7

Appendix .................................................................................................................................. 42 NIH List of rare cancers.......................................................................................................42 List of rare cancers defined in this study .............................................................................48 List of Common Cancers .....................................................................................................50

About this Master's Thesis

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School	Rollins School of Public Health
Department	Health Policy and Management
Degree	M.S.P.H.
Submission	Master's Thesis
Language	English
Research Field	Economics, General Health Sciences, Public Health
Palavra-chave	orphan drug tax credits The Orphan Drug Act orphan drug rare disease
Committee Chair / Thesis Advisor	Courtney Yarbrough, Emory University
Committee Members	Peter Joski, Emory University Xu Ji, Emory University

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