HR1414-119

What This Bill Does

This bill, known as Cameron's Law, doubles the orphan drug tax credit from 25% to 50%. Orphan drugs are medications developed to treat rare diseases that affect fewer than 200,000 Americans. The credit was originally set at 50% when created in 1983 but was reduced to 25% in 2017.

Who Benefits and How

Pharmaceutical companies that develop treatments for rare diseases receive the largest benefit, as they can claim a 50% tax credit on their clinical testing costs instead of 25%. This effectively cuts their out-of-pocket research expenses in half. Patients with rare diseases may also benefit if the increased incentive leads to more drug development for conditions that currently lack treatments.

Who Bears the Burden and How

Taxpayers bear the cost through reduced federal tax revenue, as pharmaceutical companies will pay less in taxes when claiming the expanded credit. The Joint Committee on Taxation has not yet scored the revenue impact, but doubling the credit could cost several billion dollars over ten years depending on the volume of orphan drug development.

Key Provisions

• Increases the Section 45C tax credit from 25% to 50% of qualified clinical testing expenses for orphan drugs
• Applies to taxable years beginning after enactment
• Restores the credit to its original 1983 level before the 2017 Tax Cuts and Jobs Act reduction
• Named after Cameron, presumably a patient who highlighted the need for rare disease treatments