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How the Orphan Drug Tax Credit Leverages MDA’s Fight against Rare Genetic Diseases

August 7, 2013
test tube - dollar signIn the early 1950s, a small group of concerned parents, people with muscular dystrophy and their friends started a volunteer organization, the Muscular Dystrophy Association (MDA), to raise money for research into the causes of rare genetic diseases that mysteriously destroyed muscles and shortened lives.

In the decades since — thanks to the support of a caring public and vital corporate partnerships — MDA has become a leading voluntary health agency, funding research in academic institutions and biotechnology companies worldwide. Covering more than 40 neuromuscular diseases with ages of onset ranging from birth to late adulthood, MDA’s patient reach is expansive.

The leap from that first gathering of families in 1950 to the drug development pipeline in which MDA is deeply embedded today required a deep and intentional investment into clinical research infrastructure, scientific training and innovative drug development pathways for rare diseases.

MDA’s research grant recipients are responsible for the most significant findings in neuromuscular diseases to date.  Among their achievements are discovering the genetic causes of dozens of neuromuscular disorders, including Duchenne muscular dystrophy; proof-of-principle studies on how to deliver a muscle enzyme through the bloodstream to treat Pompe disease; and how to cause cells to change the way they splice genes in strategies such as exon skipping, now being tested in clinical trials for Duchenne MD.

But despite the strong advocacy force MDA represents, each of the 40 neuromuscular diseases under the MDA umbrella is still a rare disease —and it’s very difficult to attract industry partners into the rare disease space. Without powerful incentives for industry, it's unlikely that any of those MDA-funded breakthroughs for rare neuromuscular disorders would have made it out the laboratory door.

The problem of therapy development for rare diseases must be approached through a private-public partnership.

For example, on the private, not-for-profit side, MDA has launched MDA Venture Philanthropy (MVP), the drug development arm of MDA's Translational Research Program, which is exclusively focused on identifying and funding the commercialization of treatments and cures for neuromuscular diseases.

MVP makes targeted investments in projects for which the therapeutic of interest is unlikely to advance via traditional funding sources due to the perceived risk of a small market; lack of a clear regulatory path; or because it’s based on new technology. MVP helps projects advance through the critical stages of development and ensures that successful therapies attract funding from other sources and get to market. Co-investors and follow-on funders with complementary skills are actively cultivated in the form of venture capital groups, other nonprofits, and larger biotechnology and pharmaceutical companies.  MDA’s MVP has seen successes yield from this program and more industry partners are now entering the neuromuscular space than ever before.

On the public side of the partnership, the Orphan Drug Tax Credit (ODTC) provides industry with a financial incentive to leverage the long-term investments MDA and others have made in science, manpower, infrastructure and therapy development. It allows companies to estimate an adequate return on investment for the otherwise risky business of developing drugs for very small potential markets. Through the tax credit incentive, and the promise of seven years of market exclusivity, the Orphan Drug Act hastens the process of bringing vital treatments to people who desperately need them.

MDA has been told by many industry partners that the ODTC is among the most effective incentives ever offered in terms of attracting companies to invest their finite research and development resources in rare and orphan diseases.

Communities of people – children and adults – who have no treatment options and for whom, until recently, few therapies were in development, cannot afford to dissuade drug companies from investing in lifesaving therapies. With dozens of clinical trials under way and many more on the near horizon, the hope that MDA’s founding families merely dreamed of in 1950 could soon be a reality.

Organizations, patient communities, clinicians, researchers, industry and government — all working together in innovative ways — ensure that someday we will know that reality.

This is why MDA believes it is vitally important for Congress to retain the Orphan Drug Tax Credit.


Annie Kennedy is Senior Vice President of Advocacy at MDA.