Key Measures for Biosciences Industry Still Being Debated as OBBBA Inches Forward
The "One Big Beautiful Bill" is a piece of legislation currently being debated in Congress that among many other items, includes provisions related to the Orphan Cures Act and R&D amortization – two measures of critical importance to the biosciences industry. The Orphan Cures Act aims to address concerns about the Inflation Reduction Act (IRA)'s impact on orphan drug development for rare diseases, while the R&D amortization fix seeks to modify how research and development (R&D) expenses are treated for tax purposes.
As of this article’s writing, the Senate is in the midst of a “vote-a-rama” and is considering hundreds of amendments to the legislation within very strict rules governing the process known as reconciliation.
The Orphan Cures Act is designed to fix a disincentive within the IRA related to orphan drugs. The IRA allows Medicare to negotiate drug prices, but it also excludes orphan drugs for rare diseases from these negotiations, but only if they treat a single rare disease.
The Orphan Cures Act aims to expand this exclusion to include orphan drugs that treat multiple rare diseases, preventing companies from losing incentives to develop treatments for additional rare conditions.
The Senate initially removed the Orphan Cures Act from the bill but then reinstated it.
As for the R&D amortization fix...current law requires companies to amortize R&D expenses over a period of years, rather than deducting them in the year they are incurred.
The R&D amortization fix in the "One Big Beautiful Bill" aims to allow companies to fully deduct domestic R&D expenses in the year they are incurred for a specified period, providing a tax incentive for research. MichBio and other bio-industry partners have long sought relief on this measure.
This change would align with the Section 41 Research Credit and treat software development as an eligible R&E expenditure. Some exceptions to immediate expensing are included, such as expenditures for land acquisition or depreciation.
Where do things stand? As of this hour, the bill is still under consideration, and the Senate is working on finalizing its version. It’s unclear when the entire legislation will be passed in final form, though President Trump did set a deadline of July 4th for it to clear both chambers (though it’s reported that he may agree to an extension).
The House has already passed a version of the bill with the R&D amortization fix. The bill will need to be reconciled between the House and Senate before it can be sent to the President.
MichBio is continuing to monitor the legislative deliberations and negotiations with the hope that both measures will make the final cut.
